History Says the Best Time to Buy Stocks May Be Coming

Market Overview - Equities have not performed well in 2025, with significant uncertainty due to President Trump's trade wars and fears of a potential recession [1] - The Nasdaq Composite and S&P 500 have recently entered correction territory, defined as a 10% drop from their recent highs [1] Historical Context - A bear market is defined as a 20% drop or more from an index's most recent high, and historical data suggests that investing during such times can be beneficial [3] - For instance, the Nasdaq and S&P 500 have more than doubled since their lows in April 2020, achieving a compound annual growth rate exceeding 15% [3] Investment Strategy - The principle of "being greedy when others are fearful" is emphasized, suggesting that downturns should be viewed as opportunities rather than threats [5] - Investing in strong stocks during bear markets is recommended as a strategy to capitalize on market volatility [5] Company Focus: Amazon - Amazon's shares have declined by 13% this year, but it remains a strong long-term investment due to its leadership in e-commerce and cloud computing [7] - Amazon Web Services (AWS) and its advertising unit are key growth drivers, with AWS offering a range of AI-related services that have seen increased demand [8] - Amazon's e-commerce platform benefits from a network effect, attracting more consumers as it adds more merchants [8] Growth Opportunities - Amazon Pharmacy is gaining market share from established competitors, enhancing convenience for consumers [9] - The company has a large ecosystem with over 200 million Prime members, providing multiple monetization opportunities [9] Valuation Considerations - Amazon generates consistent revenue, earnings, and cash flow, and is positioned in industries with significant growth potential [10] - The forward price-to-earnings (P/E) ratio for Amazon is approximately 30, compared to the average of 25 for the consumer discretionary sector [10] - Despite its premium valuation, Amazon is considered a strong buy, especially if a bear market occurs [11]