Can Buying a Broad-Market Index Like the S&P 500 During a Crash Be Considered Value Investing?

The S&P 500 has experienced several periods when widespread economic pessimism coincided with substantially lower stock valuations.

The 1970s, early 1980s and 2008 financial crisis are all interesting historical examples.

Although the S&P 500 isn't exclusively a value index, buying a diversified collection of businesses at depressed prices can be consistent with value-investing principles.

For instance in 2022.

Inflation, rising interest rates and recession fears contributed to a significant stock-market decline.

By the end of the year, the S&P 500 had fallen 19.44%, or 18.11% when accounting for dividends.

Investors were paying considerably less for the index than at the beginning of the year.

Here is a video [example of someone losing to that index decline in 2022 but still being able to benefit 3 years later](https://youtu.be/FdIgb486Gtg?si=EC258G-Kp9KN9Piq). The video compares a non-traditional investment within the same period of time.

[https://youtu.be/FdIgb486Gtg?si=EC258G-Kp9KN9Piq](https://youtu.be/FdIgb486Gtg?si=EC258G-Kp9KN9Piq)

Valuation change isn't just about the falling share prices.

In May 2022, FactSet reported that the S&P 500's forward P/E ratio had declined to 16.6, below its 10-year average of 16.9.

While that didn't automatically make the entire index undervalued, it created an interesting question about long-term investing during periods of uncertainty.

If you believe in the long-term earning power of American businesses, should a market crash change your willingness to invest—or simply the price you're willing to pay?