The instinct to move to cash when markets get ugly is one of the most natural impulses in investing. It also happens to be one of the most expensive ones, and Wells Fargo just published data to prove it.
The numbers behind the warning are more specific than most investors expect.
Wells Fargo Investment Institute cautions against emotional investing
Jaden Frazier, analyst at Wells Fargo Investment Institute, published a market commentary warning indicating that investors who react emotionally during periods of volatility risk missing the stock market’s strongest rebounds, according to the Institute.
“Markets are forward-looking, so rebounds can happen far quicker and more suddenly than anticipated,” Frazier wrote in the report. That single sentence is the core of the entire argument, and the data he published alongside it makes it harder to dismiss than most boilerplate stay-invested commentary.
S&P 500 data reveal surprising trend of best days for gains
The headline figure is striking. Sixty percent of the S&P 500’s best trading days between May 1996 and April 2026 occurred during bear markets. An additional 18% took place in the early stages of new bull markets, according to GuruFocus.
That means roughly 78% of the market’s best single days happened at moments when investor sentiment was either deeply negative or just beginning to recover. An investor sitting in cash during those periods would have missed the gains entirely while bearing the cost of being wrong on timing.
Frazier’s report also showed the S&P 500 repeatedly recovering from major shocks over the past decade, including the Covid pandemic, recession fears, tariff announcements, and the current Iran conflict.
Despite repeated drawdowns tied to each of those events, the index continued trending higher over time, according to Wells Fargo.
Why the Iran conflict makes this investor advice especially timely
The Wells Fargo commentary lands at a moment when investors are navigating one of the most complex macro environments in recent memory. Oil prices have…
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