Market Slump Got You Down? Buy Home Depot Now.
Investors felt great after gains of over 20% apiece for both the S&P 500 and Nasdaq in 2021, but the mood has shifted in 2022 as these indexes have fallen 21% and 33% year to date, respectively. While this is discouraging, investors can also take solace in the fact that bear markets are temporary in nature and that they create a buying opportunity to accumulate more shares of great companies at discounted prices. Legendary investor Shelby Davis once commented on this, explaining that "A down market lets you buy more shares in great companies at favorable prices. If you know what you're doing, you'll make most of your money from these periods. You just won't realize it until much later."
Remember that buying a stock isn't just buying a name on a screen -- you are acquiring a piece of a publicly traded company that entitles you to a portion of its earnings and cash flows, and a down market gives you the opportunity to buy more of the company at a cheaper price. So while it might not feel great at the moment, a bear market is a good time to build up positions in long-term winners that have sold off. With shares down 32.5% year to date, home improvement retail giant Home Depot (NYSE: HD) is a good example of a great company that you can buy now at a favorable price to turn the market slump into a solid long-term opportunity.
Image source: Getty Images.
Source Fool.com
