The S&P 500 has been experiencing significant fluctuations in recent days, with a steep decline followed by a substantial rebound. Many investors are wondering whether to buy stocks on the rebound. History suggests that buying on the initial rebound may not be as lucrative as expected.
Since its inception in 1957, the S&P 500 has experienced similar declines 13 times, excluding the most recent drop. However, the index has rebounded only twice in a mostly straight upward line. The most recent example occurred in 2020, when stocks plummeted due to the COVID-19 pandemic but eventually recovered.
Unfortunately, many initial rebounds have been temporary, with the index bouncing around near its lows for months after the first rebound. For instance, the S&P 500 was range-bound until it began a sustained rebound in 1958. Other cases were even worse, such as the dot-com bubble bursting in 2000 and the index not fully recovering until five years later.
However, despite these mixed results, there are valuable lessons to be learned from the S&P 500’s history. Buying and holding the index over the long term has consistently paid off, with investors who use dollar-cost averaging strategies reaping excellent returns. For investors with a horizon of five years or more, the answer is a resounding “yes” – it’s advisable to buy stocks on the rebound after a major sell-off.
Source: https://www.fool.com/investing/2025/04/12/should-you-buy-stocks-on-the-rebound-after-the-mar