The S&P 500 (SNPINDEX: ^GSPC) and Nasdaq (NASDAQINDEX: ^IXIC) went through some wild swings after the Democrats swept the midterms on Nov. 3. Energy, industrial, and technology stocks struggled amid concerns of slower AI spending and shifting regulations.
However, expectations for reduced inflation and lower oil prices — especially if the Iran war ends — lifted many real estate, financial, and consumer discretionary stocks. The stock market still seems shaky today, but I wouldn’t fret too much over its near-term moves.
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Why shouldn’t you worry about the stock market?
The S&P 500 has generated an average annual total return of more than 10% since its inception in 1957, even as the U.S. endured ten official recessions and 11 bear markets.
Investors who tuned out the near-term noise and focused on long-term gains were well rewarded, but those who prematurely sold their stocks left a lot of money on the table.
During the last four bear markets (the dot-com crash, the Great Recession, the COVID crash, and the Fed’s tightening cycle), the S&P 500 experienced peak-to-trough declines of 49%, 57%, 34%, and 25%, respectively. Investors who bought more stocks during those downturns reaped even bigger rewards than those who simply held them through those volatile swings.
U.S. Bank‘s Economic Research Group believes there’s only a 25% chance of a recession occurring within the next 12 months. But even if that downturn happens, I’d welcome it as an opportunity to buy more of my favorite stocks at discounted valuations.
Should you buy stock in S&P 500 Index right now?
Before you buy stock in S&P 500 Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $344,878!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,097,846!*
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See the 10 stocks »
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends U.S. Bancorp. The Motley Fool has a disclosure policy.
