Investors: 2 Reasons to Be Optimistic About the Stock Market Right Now

This is a tough time to be an investor. The S&P 500 is down by roughly 20% from its peak in early January, putting it into bear market territory, and the tech-heavy Nasdaq is down more than 27% year to date.

In times like these, it's easy to feel pessimistic and discouraged about investing. It can even be tempting to get out of stocks altogether. But the future still looks bright for the stock market, and there are two good reasons to be optimistic right now.

1. The U.S. stock market has a strong track record

The stock market has experienced its fair share of rough times. In the past two decades alone, it has seen everything from the bursting of the dot-com bubble to the Great Recession to the crash in the early stages of the COVID-19 pandemic. However, despite everything, the S&P 500 is up by more than 162% since 2000.

^SPX Chart

^SPX data by YCharts

Nobody can predict with any certainty exactly how the U.S. market will perform in the coming weeks or months. But historically, it has recovered from every single downturn it has experienced, and eventually gone on to set new highs. No matter what happens in the near future, it's extremely likely the market will rebound eventually.

How long it will take to recover is also uncertain. But by staying invested for the long term, it's far more likely you'll see positive average returns over time.

2. Now is a fantastic buying opportunity

When share prices are down sharply and pessimism abounds, it may feel like the worst possible time to invest more money into stocks. In reality, though, such markets present some of the best opportunities to buy.

Many stocks have plummeted over the past eight or nine months, declines that in many cases have left them priced at discounted valuations. If you've had your eye on a particular company, now could be your best chance to buy when it's essentially on sale.

This is especially true if that stock normally trades at a particularly high valuation. Amazon (NASDAQ: AMZN) shares, for example, are down nearly 30% over the past year.

Not only does investing during a downturn save you money, but it could also set you up for enormous returns.

While we don't know exactly when the U.S. market will recover, we can expect that, based on the patterns of history, at some point, it will. By investing now, you can take advantage of that eventual rebound. Case in point: If you had invested in Amazon in March 2009 -- when the S&P 500 hit its lowest point during the Great Recession -- you would have enjoyed a return of 113% in the following year alone.

Just be sure you're doing your research and maintaining a long-term outlook when you buy. Not all stocks will recover from downturns, and the ones that do could take years to reach their full potential. But investing is a long-term endeavor, and with the right stocks, it's possible to make a lot of money over time.

Making the most of a stock market downturn

Market slumps can be tough to stomach, and it's normal to feel nervous about the future. But Wall Street is no stranger to volatility, and this turbulent period will pass.

It isn't always easy to stay optimistic and continue investing, but it's one of the smartest financial moves you can make right now. By investing in shares of strong companies now and holding onto them for the long term, you can make the most of this rough patch.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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