March 8, 2021, was a rough day for the Nasdaq Composite Index.

The Nasdaq lost another 2.4% that day, dropping the tech-heavy index into a correction.

Even Tesla Inc. (Nasdaq: TSLA) — one of Wall Street’s favorite companies — fell 6%.

Reuters noted that tech stocks “are now seen by some investors as overvalued.”

It was the perfect time to sell, right?

Not quite.

The very next day, the Nasdaq climbed 3.7% — its best performance in months.

And Tesla rallied an incredible 19.6%.

In one week after the start of the correction, the Nasdaq was already up 6.7%.

And six months later, it was up 21.2%.

If you had sold your shares on March 8, you would’ve missed out on all those gains.

Flash forward to 2022, and the Nasdaq is down 16% from its all-time high.

And again, some investors are panic-selling.

But they should be using this as an opportunity to buy more shares.

These two charts show why…

The Nasdaq Has Been Amazing After Corrections

MarketWatch recently looked at all 65 times the Nasdaq has dropped into correction territory.

That means the index fell 10% from its recent high.

It found that, on average, the index is up 2.2% three months after a correction.

By six months, it’s up over 7.5% on average.

By 12 months, it’s up over 15% on average.

And the median returns are even better.

Nasdaq composite median returns

(Source: MarketWatch.)

That’s great news for tech investors. But the data for the last 15 years is even more encouraging.

Aside from the 2007-2008 financial crisis, the Nasdaq has been amazing after corrections.

Nasdaq composite after closing in correction territory

(Source: MarketWatch.)

There were 15 Nasdaq corrections from 2009 to 2021.

Three months later, the index was up every time except once. That was in 2018, and the Nasdaq was only down 0.5%.

Six months later, the index was up every single time — in several cases by 30% or more.

Going out to 12 months, we see the same outperformance, including several years where the Nasdaq gained over 50% following a correction.

Don’t Panic

Sure, inflation is at its highest level in 40 years. And there are other problems to worry about as well.

But smart investors don’t trade because they’re afraid. They follow the data.

And the data shows that the Nasdaq has overcome market panics time and time again.

You don’t want to miss out while tech stocks gain 30%, 40%, 50% or more.

Corrections are also a great time to grab shares of your favorite stocks at a discount.

That’s what Ian King told his Strategic Fortunes subscribers when he released his latest trade on Wednesday.

You can learn more about Ian’s strategy for investing in tech stocks by clicking here.


Jay Goldberg

Assistant Managing Editor, Banyan Hill Publishing


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