Stocks Are Terrible. Buy Stocks

Following my Q&A with J. Michael Martin this week, in which we talked about the benefits of active investing during long-term market weakness, a study showed up in my inbox.

It' s a bit of research from wealth managers at Burns Advisory Group that shows just how much missing a market recovery can cost you.

Burns looked at the average recovery period of the last four major market downturns, dating back to the early 1970s, to figure out just how much investors stand to make if they get in during the early stages of a recovery. They found this:

The good news? The average total return during the twelve month recovery was a robust +52.3 percent. The bad news? Investors who sit out the first half lose nearly 75 percent of the total recovery return.

Investors who suffered the downturn but stayed in also fared better. Burns says those who experienced the last six months of the market downturn before the twelve month recovery period began realized an average 38.4 percent gain.

Those who got shaken out fared worse. An investor "who sits out for the first six months of the recovery period waiting for an all clear sign realized a diminished average return of 11.4 percent during the last six months of the recovery period," the study says.

Here's why:

The research shows that bear market recoveries tend to be front loaded events and the biggest risk might be not having their portfolio prepared for the recovery. "Unfortunately many Main Street investors wait too long and wind up missing the majority of the potential recovery return," says Eric Nelson, Chief Investment Strategist with Burns Advisory Group.

With all the fear in the markets today, it's a tough sell convincing investors that it's a good time to buy. But at times like this, it's good to remember that lots of the damage has already been done, compared with the size of a possible recovery.