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History Says the Best Time to Buy Stocks May Be Coming
Equities haven't performed well so far in 2025. President Donald Trump's trade wars are creating significant uncertainty, while many fear that a recession might be coming -- something else that could send the stock market in the wrong direction. The Nasdaq Composite and S&P 500 have both recently hit correction territory -- defined as a 10% drop from their most recent highs. What will happen next? Predicting these things is hard, but a bear market is a real possibility.And if it does happen, it will create incredible opportunities for savvy investors. Let's see what history says about buying stocks during bear markets.A bear market is a 20% drop (or more) from an index's most recent high. So, correction territory gets us halfway there. Though it can be challenging to remain calm when equities fall by that much, the historical record shows that investing in stocks during a bear market is an excellent move. Let's take one recent example: the downturn that happened in 2020 due to pandemic-related disruptions. The Nasdaq and the S&P 500 have more than doubled since they hit rock bottom in early April 2020 -- that means they have generated a compound annual growth rate of greater than 15% in this period, well above the market's long-term historical return.Continue reading
Equities haven't performed well so far in 2025. President Donald Trump's trade wars are creating significant uncertainty, while many fear that a recession might be coming -- something else that could send the stock market in the wrong direction. The Nasdaq Composite and S&P 500 have both recently hit correction territory -- defined as a 10% drop from their most recent highs. What will happen next? Predicting these things is hard, but a bear market is a real possibility.
And if it does happen, it will create incredible opportunities for savvy investors. Let's see what history says about buying stocks during bear markets.
A bear market is a 20% drop (or more) from an index's most recent high. So, correction territory gets us halfway there. Though it can be challenging to remain calm when equities fall by that much, the historical record shows that investing in stocks during a bear market is an excellent move. Let's take one recent example: the downturn that happened in 2020 due to pandemic-related disruptions. The Nasdaq and the S&P 500 have more than doubled since they hit rock bottom in early April 2020 -- that means they have generated a compound annual growth rate of greater than 15% in this period, well above the market's long-term historical return.
