It's hard to overstate how unusually disappointing the past year has been for stocks. A brief respite to plunging markets earlier this summer has already been mostly wiped away. At the moment, the Nasdaq Composite index is down around 28% from the high water mark it set last November.

Now that we're in what most economists would call a bear market you might be thinking about tucking your tail between your legs and hiding under a piece of furniture. That's an understandable emotion, but history tells us it would be a mistake. Remember, every steep market decline in history has been wiped away by subsequent bull markets.

We can't know if the market sentiment is going to improve or worsen in the near term. That said, we can be fairly confident these former top-performing Nasdaq stocks will outperform over the long run. Here's why.

Investor looking down at a tablet.

Image source: Getty Images.

Upstart Holdings

Upstart Holdings (UPST 0.82%) is on a mission to enable effortless credit, but it seems the market is on a mission to push its stock price into the dirt. Shares of the consumer credit risk evaluator have fallen a terrifying 94% since the stock peaked last November.

Upstart operates an artificial intelligence-powered platform an increasing number of lenders hire to evaluate individual credit risk. Banks can't get enough of the automated platform because it's more than a productivity tool. Upstart's platform incorporates more information to create a credit risk picture than a traditional FICO score from the Fair Isaac Company. This allows Upstart's customers to engage new, creditworthy customers that they might have turned away otherwise.

Upstart's stock has been tanking, but the business is growing by leaps and bounds. There were 71 partner banks and credit unions originating new loans with Upstart's platform at the end of June. That was 184% more than the company had a year earlier. With new partners beating a path to its door, the road ahead is probably a smoother one than its stock price suggests.

Axsome Therapeutics

Axsome Therapeutics (AXSM 1.36%) recently earned approval for its first drug and hasn't recorded a single product sale yet. You could regret not buying the stock on the dip because the first product to emerge from its pipeline looks like a potential blockbuster.

Shares of Axsome Therapeutics shot up in August when the FDA approved Auvelity for the treatment of major depressive disorder (MDD). Since then, the stock has been kept down by an overall bear market.

An estimated 21 million adults experience MDD each year, and most aren't satisfied with their antidepressant options. As the first new treatment for this enormous patient population, Auvelity could start generating over $1 billion in revenue for Axsome Therapeutics in just a few years. Biotech stocks generally trade at mid-single-digit multiples of total sales. That means reaching expectations could cause the company's $2.5 billion market cap and its stock price to roughly double. 

New drug launches are tricky, especially for companies on their first attempt. Luckily, the FDA gave Auvelity broad approval without restricting it to MDD patients who failed previous medications.

Auvelity is a proprietary formulation of bupropion, an antidepressant that is taken by millions, and dextromethorphan, a common cough suppressant. Physicians already comfortable with its components could soon start prescribing it to their MDD patients, but there are no guarantees Axsome can pull off a successful launch.

This is a smart stock to buy now. Just be sure to place it in a diversified portfolio.