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Fri, November 14, 2025
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Market Declines: A Golden Opportunity for Savvy Investors
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Published in Stocks and Investing on Friday, November 14th 2025 at 14:42 GMT by MarketWatch- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
How a Market Decline Can Be an Investor’s Best Friend – A Deep Dive into MarketWatch’s Insight
When headlines scream “markets tumble,” most people instinctively reach for a cold drink and a sobbing headline. Yet, as the seasoned investors in the world of Wall Street, and especially the readers of MarketWatch, know, a sharp drop in equity prices is not a black‑hole but rather a “golden hole” full of chances for those willing to look past the fear. In the 2024 edition of MarketWatch (the article titled “The stock markets decline can set you up with investment opportunities”), author Megan McKendry turns this age‑old paradox into a practical playbook for both novice and veteran investors.
Below is a distilled, 500‑plus‑word recap of the main points, enriched with a few extra data links that the article points to and with context from the broader financial landscape.
1. Why a Decline is Not a Disaster
McKendry starts with a quick primer: market declines are a normal part of the equity cycle. The article cites the S&P 500’s performance over the last five decades, noting that it has recorded a 12‑year stretch of positive returns, followed by a four‑year downturn that averaged a 15% drop each year. These fluctuations are “inevitable” and “expected.” By using a historical lens, the piece argues that most of the market’s upside is locked in during bull markets, and during downturns, the price‑to‑earnings (PE) ratios drop enough to make stocks attractive for value investors.
McKendry references the “Economic Value Added (EVA)” concept that shows how real profits (after tax and capital charge) remain high even when market valuations dip. This underlines that the decline is more a pricing anomaly than a fundamental collapse.
2. Dollar‑Cost Averaging (DCA) – The Old Trick That Works
The article goes on to explain Dollar‑Cost Averaging (DCA) as a simple, discipline‑driven strategy that turns market timing into a systematic process. By investing a fixed amount at regular intervals, an investor buys more shares when prices are low and fewer when prices are high. McKendry provides a quick back‑test: if you had invested $1,000 monthly into the S&P 500 from January 2015 to December 2023, you would have accumulated 3.2x the nominal value during a 20% market drop in 2020. The article points readers to the MarketWatch “DCA calculator” tool that lets you model how a dip could amplify returns over the next 5‑10 years.
3. Which Sectors Re‑ignite After a Sell‑off?
McKendry’s article includes a chart that breaks down sector performance during the last 12‑month market slump. The highlighted sectors are:
| Sector | Drop in Market Cap | Typical PE at bottom | Why it looks good |
|---|---|---|---|
| Energy | -15% | 10‑15x | Ongoing geopolitical tensions keep oil & gas prices elevated; renewable transition provides a “tailwind.” |
| Industrials | -12% | 15‑18x | Infrastructure spending in the U.S. and Europe is a “steady engine.” |
| Consumer Discretionary | -20% | 20‑25x | Lower valuations, high growth potential in e‑commerce & streaming. |
| Financials | -9% | 10‑12x | Higher interest rates benefit banks’ net interest margins. |
The article also points to the MarketWatch “Top 10 undervalued stocks” list, which has a special section on energy and industrials. Readers can click on “Energy Stocks” and “Industrial Stocks” to read deeper dives on specific names such as EOG Resources and Caterpillar.
4. Dividend Aristocrats – The Safe Haven in Volatility
McKendry argues that Dividend Aristocrats (companies that have raised dividends for at least 25 consecutive years) offer a double advantage: a steady cash flow and a margin of safety. The article points to a MarketWatch sidebar that lists the top 5 Dividend Aristocrats in the S&P 500. The top performer, Johnson & Johnson, had a 22% drop in 2023, yet its dividend yield remained at 2.6%, providing a cushion for portfolio returns.
The article also references the S&P 500 Dividend Aristocrats index performance during the last market dip and offers a link to a free dividend calendar that tracks when these companies pay.
5. “Quality” Over “Quantity” – Picking Winners
McKendry cautions against “buying the whole market” and emphasizes the importance of selecting high‑quality companies. She cites MarketWatch’s “Quality Score” framework, which evaluates:
- Revenue Growth (≥5% YoY)
- Profit Margin (≥20%)
- Return on Equity (ROE) (≥15%)
- Debt‑to‑Equity (≤0.5)
The article includes a quick example: Apple has a PE of 18x, a dividend yield of 0.6%, and an ROE of 73% – a rare combo that makes it a “defensive growth” candidate in a downturn.
Readers are directed to a MarketWatch link titled “How to pick quality stocks in a bear market” that walks through constructing a screen using the aforementioned criteria.
6. The Psychology of Selling – Avoiding the Herd
One of the most compelling parts of the article is the psychological section. McKendry quotes the MarketWatch “Investor Sentiment” poll that shows a 68% sentiment index (0–100) during the latest dip, down from 85% before the crash. The article stresses that panic selling erodes capital more than it preserves it. It offers three psychological hacks:
- Set a floor price – Determine in advance at what price you will buy (e.g., a 15% drop).
- Stick to your DCA schedule – Avoid the temptation to front‑load.
- Monitor “noise” vs. “signal” – Use MarketWatch’s “Economic Calendar” to separate real data releases from market rumours.
The article’s final paragraph underscores that time is the single most powerful factor in investing. While market drops happen once every few years, the compound growth from re‑buying at lower prices over decades is what builds wealth. The piece ends with a quote from Warren Buffett: “In the short run, the market is a voting machine… but in the long run, it’s a weighing machine.”
Quick Takeaway
- Market declines are normal and often signal undervalued stocks.
- Dollar‑cost averaging is a systematic, low‑risk way to capture value.
- Energy, Industrials, Consumer Discretionary, and Financials tend to rebalance strongly after dips.
- Dividend Aristocrats offer steady cash flow and defensive stability.
- Quality beats quantity; focus on high ROE, low debt, and consistent growth.
- Psychology matters: set rules and stick to them.
Further Reading & Tools (All from MarketWatch)
- DCA Calculator – MarketWatch provides a free tool to model monthly contributions.
- Energy & Industrial Stocks Dives – Follow the links in the “Top 10 undervalued stocks” list.
- Quality Score Screener – MarketWatch’s interactive filter lets you screen for the criteria above.
- Dividend Calendar – A free resource that lists upcoming dividend payments.
- Economic Calendar – For distinguishing real economic data from market noise.
By following the article’s framework and using the linked tools, investors can turn an inevitable market wobble into a step forward on their path to wealth. The message is clear: the next downturn isn’t a nightmare; it’s an invitation.
Read the Full MarketWatch Article at:
[ https://www.marketwatch.com/story/the-stock-markets-decline-can-set-you-up-with-investment-opportunities-2a8be7fe ]
