Missed AI’s “Act 1”? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″\u2014the R&D phase. “Act 2” is the global rollout. Continue \u00bb<\/a> <\/p>\n The best way to keep a bear market from sinking your portfolio is to ensure it is diversified across stocks and exchange-traded funds (ETFs) that have performed well during downturns. When the market tanks 20% or more, it’s typically measured against the S&P 500 or the Nasdaq Composite, which are large-cap stock or technology indexes. <\/p>\n There are typically other areas of the market that aren’t hit as hard. The chart below shows the returns of different investment styles in 2022, the last bear market. You see that value ETFs have vastly outperformed growth, technology, and broad market-cap funds. <\/p>\n IVW<\/a> data by YCharts<\/a> <\/p>\n So, you definitely want to make sure you have a healthy dose of value ETFs and stocks in your portfolio because, in this cycle, it is the large-cap growth stocks that look extremely overvalued, based on the Shiller P\/E. So when the market corrects, they will likely feel it the most. If you have stocks in your portfolio with valuations that are not only super-high but well out of their historical ranges, those are red flags, and you may want to pare back on them. <\/p>\n But diversification goes beyond value. You should also have a substantial portion of your portfolio in international and emerging-market stocks, which have outperformed U.S. large caps over the past 12 months. <\/p>\n Don’t forget dividend stocks <\/p>\n In general, you want stocks or ETFs of quality companies, perhaps blue chip stocks<\/a> or those built to navigate downturns. You can tell by how much cash they generate, because these firms have the operating cash flow to continue investing and growing when most others don’t. <\/p>\n They also have the ability to fund their dividends, providing investors with income that can be reinvested to boost total return. Over time, dividends have accounted for 40% of the S&P 500’s total returns, according to an analysis by Fidelity. But in bear markets or downturns, dividends account for a much larger share of total returns. <\/p>\n In the 1970s, for example, about three-quarters of the total return that decade came from dividends. In the 2000s, stock values were negative, so dividends accounted for all of the positive returns that decade. <\/p>\n So, the takeaway is to start preparing now and create an all-weather, diversified portfolio with stocks and ETFs that tend to perform well when the broader market does not. <\/p>\n Should you buy stock in iShares Trust – iShares S&P 500 Value ETF right now? <\/p>\n Before you buy stock in iShares Trust – iShares S&P 500 Value ETF, consider this: <\/p>\n The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks<\/a> for investors to buy now\u2026 and iShares Trust – iShares S&P 500 Value ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. <\/p>\n Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $364,023!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,467,933!* <\/p>\n Now, it’s worth noting Stock Advisor’s total average return is 948% \u2014 a market-crushing outperformance compared to 214% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of October 6, 2026. <\/p>\n Dave Kovaleski<\/a> has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Morningstar Mid-Cap ETF, Vanguard Morningstar Small-Cap Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Image source: Getty Images. Fend off the bear <\/p>\n
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