Since the March 23, 2020 bottom, investors have enjoyed a historically strong bounce-back rally — the widely followed S&P 500 has gained an impressive 90%.
For example, there have been one or two double-digit percentage declines within the three years following a bottom in each of the previous eight bear markets prior to the coronavirus crash .
To add to this point, data from market analytics firm Yardeni Research shows that there have been 38 double-digit declines in the S&P 500 over the past 71 years.
The previous four times the Shiller P/E surpassed and held above 30 during a bull market rally, the index subsequently declined by a minimum of 20%.
While history may signal trouble ahead, it also tells us that each and every double-digit decline has been a buying opportunity.
Because it’s built in the cloud and relies on artificial intelligence, it’s growing smarter at identifying and responding to threats all the time.
It’s been retaining 98% of its clients, has seen existing clients spend 23% to 47% more on a year-over-year basis for the past 12 quarters, and recently reported that 64% of its customers have purchased at least four cloud module subscriptions.
Although it’s on track to generate more than $100 billion in advertising revenue in 2021, nearly all of these ad sales are coming from its namesake site and Instagram.
As a result of these investments, its electric generation costs have declined and its compound annual growth rate has consistently been in the high single digits for more than a decade.
In addition to growth rates that are well above the sector average, NextEra still benefits from the predictability of energy demand.
Buying into Visa during these short-lived crashes or corrections should allow long-term investors to be handsomely rewarded by this numbers game.
You’d think that Visa could generate big bucks from interest income and fees by lending during these long-lived periods of expansion.
What about those pesky low retail margins, you ask? Amazon has signed up more than 200 million people globally to a Prime membership.
Amazon Web Services brings in around one-eighth of the company’s total sales but accounts for well over half its operating income.