Why You Should Buy the Nasdaq’s Dip
There are two reactions to a downturn…
Panic and joy.
The former response leads to mistakes and regret. The latter leads to spontaneity and opportunity.
Now, the tech-heavy Nasdaq has fallen for three weeks straight. And the market has been off its meds.
But smart investors have been busy… and joyful.
Blink and It’s Gone
Earlier this week, the Nasdaq’s year-to-date returns went negative.
The headlines read “Tech Tumbles” and “Nasdaq Falls Into Correction.”
And panic immediately ensued.
It was one of the fastest corrections ever. It took only 15 trading days for the index to drop 10% from an all-time high.
Meanwhile, proactive traders were backing up the truck on tech and clean energy plays.
Because we’ve seen this episode before… and we know how it ends.
Historically, the tech-heavy index has recovered beautifully from other fast corrections.
One month later, stocks are up 67% of the time.
Three months later, stocks are up 75% of the time.
Six and 12 months later, stocks are up 91% of the time.
I don’t know about you, but I like those odds.
And they’re not up just 1% or 5%…
Six months after a correction, Nasdaq stocks are up 21% on average.
One year after a correction, the index is up 33% on average!
And let’s not forget, this is just the less impressive sequel to last year’s mania…
At its worst, the Nasdaq was down 23%. But it ended the year up 44%!
Plus, the index is up roughly 80% since March 2020. It fell briefly lower before taking off in a historic run.
It’s true that the market ultimately moves in one direction, and that’s up…
But it’s not a linear incline of easy wins.
If it was, it would be a lot easier to make money in the markets. And where would the fun be in that?
Occasionally, stocks have to slow down to speed up. Take a breather. Come up for air.
And that’s when investors should pounce.
The minor downturn we’ve been seeing doesn’t worry me one bit.
If the underlying industry or company is strong, it will recover. And it will soar higher.
Smart investors will continue to do what they’ve been doing over the past year…
Buy the tech dip… and choose joy.
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