This Bear Market Could Be the Best Investing Opportunity in More Than a Decade

Some people see a glass of water as half-empty. The die-hard pessimists probably even think the water in the glass contains arsenic. I'm not in either of those groups. Count me among those who always see a glass of water as half-full.

I'll admit, though, that it's not easy being optimistic with the current stock market environment. Most of the stocks in my portfolio are down quite a bit. However, I'm encouraged when I think about 10 or 15 years from now. Why? This bear market could be the best investing opportunity in more than a decade.

Party like it's 2009? 

The late musical prodigy Prince had a big hit years ago with a song that included the lyrics, "I'm gonna party like it's 1999." For investors, the present (or at least the near future) could be a time to party like it's 2009 instead.

There's no question in retrospect that 2009 was a fantastic time to buy stocks. The S&P 500 index has soared more than 320% from the beginning of 2009 through today. The Nasdaq-100 index skyrocketed nearly 830% during the same period. 

But here's the important thing to know: It didn't feel like such a great opportunity for many investors at the time. The Great Recession was still underway in early 2009. Stocks didn't bottom out until near the end of the first quarter of the year. No one knew how long the bear market would last.

Fast forward to today. The economy is not officially in a recession, but many experts expect one is on the way soon. Many stocks continue to fall overall even with a bounce here and there. One can only guess when the bear market will end.

The current situation is different than 2008 and 2009, of course. It's also different from the quick COVID-19-caused recession and bear market of 2020. However, I fully expect that years from now, investors will look back to our current period as a prime time to buy stocks.   

Three simple rules

How can investors take advantage of the major opportunity this bear market is giving? I think there are three simple rules to follow.

First, don't try to time the market bottom. Instead, identify the stocks of excellent companies with strong underlying businesses that trade at attractive valuations.

Second, buy the best stocks that you find incrementally. It's entirely possible that the stock market will decline further. If so, investing in stages (buying monthly is one good approach) instead of putting all of your cash into stocks at one time could serve you well. 

Third, wait. This rule can't be stressed enough. Investors who bought stocks in early 2009 and sold them within a year or so (whether they were up or down) missed out on most of the longest bull market in history. It's important to give stocks enough time to run. 

Lots of great stocks

The good news for investors is that there are lots of great stocks that meet the criteria mentioned above. I'll specifically point out two that I really like.

Some people might be concerned about Google parent Alphabet's (GOOG -1.96%) (GOOGL -1.97%) earnings miss and weak advertising sales growth in the third quarter. Not me.

The company's long-term prospects remain solid. Alphabet continues to be highly profitable. It ended Q3 with a cash stockpile of $139.6 billion. The stock trades at under 20 times free cash flow, an attractive valuation for a company with such a strong moat and multiple paths to grow.

Vertex Pharmaceuticals (VRTX -0.76%) is another of my favorite stocks. Unlike Alphabet, it's trouncing the market so far this year. I think Vertex's future looks even brighter.

The drugmaker enjoys a monopoly in treating the underlying cause of cystic fibrosis (CF). It should soon expand beyond CF. Vertex and CRISPR Therapeutics plan to file for regulatory approvals of exa-cel in treating two rare blood disorders (beta thalassemia and sickle cell disease) over the next few months. The company's pipeline includes two other non-CF therapies with blockbuster sales potential. 

Vertex's forward earnings multiple of 20 might not seem all that appealing. However, the company's growth prospects are so promising that I view the biotech stock as a bargain right now.

Again, Alphabet and Vertex are only two examples. You should be able to easily find other great stocks to buy in the current bear market. The glass of water really is half-full.