Should You Buy the Dip?

When the stock market goes down, you might hear people encouraging you to "buy the dip". But what does that mean, and is it a good idea?

Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson, AFC®
Directors: Katie Graham & Andrew Matthews
Written by: Andrew Matthews
Executive Producer: Amanda Fox
Produced by: Katie Graham
Edited & Animated by: Dano Johnson
Fact checker: Yvonne McGreevy
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Two Cents is produced by Spotzen for PBS

[Hotsauceonmy]

I am enjoying Philip’s transition from fiscally responsible dad to fiscally responsible dad who listened to 90s Red Hot Chili Peppers

[kortyEdna]

Sold my APPL before it tanked, will buy at next major drop. I’d definitely need to make use of the $250k liquidity elsewhere. So what should I be looking at? Large cap or small cap stocks? Maybe crypto?

[forbiddenwar]

Buying the dip also has an expensive hidden cost. All the time and stress spent in trying to time exactly when to buy and sell can wreck your health.

[ninjaguysith]

I tried "day trading" and buying dips. I hate the highs and lows of gambling and realized it wasn't for me. Seeing the prices go up and down gave me mild stress. Then thinking about the cost of inflation from waiting for the dip, paying taxes on the gains, and the time it takes to pay attention to the trends wasn't worth it. I think the key to doing this is asking yourself if you're enjoying it or if it stresses you out. I have friends that LOVE watching the market. I personally, would rather spend my time doing other things. I took some of my savings and put it into I-bonds instead.

Could you guys do a video on surviving inflation?

[mgailp]

The only dip I took advantage of was Covid. I cobbled together $5, 000 and gave my broker a list of "buy at" prices that he said would never happen. I now own just a little bit of Disney and Coke, but a couple others never got that low.

[VarsVerum]

Time in the market > Timing the market. Trying to pinpoint the lowest exact point is nearly impossible so most people just dollar cost average. Referring to your 2x vs 1.5x vs 1.1x example. Most people can probably score a 1.4-1.6x with it so that's the most stable choice.

[BrandonMinguez]

Dollar cost averaging is one of the best ways to grow your investments. You can try and time out the best time to buy (I bought a lot a few weeks ago) but you also need to be able to stomach the value going down further when we're in volatile markets.

[sovashadow]

On top of the already great advice in the video, also remember:

1. Only use what you don't foresee needing within 10 years.
2. The more patience you have, the better.
3. Always DYOR [Do your own research] on investments
4. Know your risk tolerance.

Also funny, the last part of this youtube id/url spells OOps 🤣

[CommandoX]

2:55: This point forth, this is an excellent illsutration of the chief problem with waiting to "buy the dip" of even a "sure thing" (such as the broad market) — that is, the waiting part, and all the loss that can (and, commonly does) come along therewith.

[hillfortherstudios]

Another important factor is the dividend. If you hypothetically waited a year, you are missing 1 year of dividends.

[SherellDimaria]

I'm interested in investing, but I'm not sure where to start. Do you have any advice or contacts who can help me out?

[robmckee]

I prefer spinach dip. 😉 The video caught me in a moment of weakness and I just couldn't resist. Love the channel.

[rajasbrahme]

I have been following you from about 3to 4yrs..

Thank you for all your two cents

[snowballeffect]

LOL omg 1:23 is also exactly when I understood what she was talking about, too!
P.S. loved you on TFD!

[KaironQD]

Hooray for Dollar Cost Averaging! Thank you for getting to this point, I really agree with it even though I have nothing against the idea of buying the dip itself.

One thing I would add though is that this video talks about buying individual stocks, which I personally consider risky and not diversified. I propose that you could "buy" the dip, or better yet Dollar Cost Average, against a cheap total market index fund so the question is much easier to understand: is the entire US/World Stock Market as a group (instead of just a single company that is super specific and could fail versus the entire national economy succeeding) going to tank, or is this dip momentary?

[typhooni]

4:16 that's not dollar cost averaging. The individual is buying each time they get paid. immediately putting their money to work. Dollar cost averaging, for example:, would be taking one big pile of cash, you have now, and buying in with 12 equal monthly payments .

[PanteraRossa]

Simply adding rules to your dollar cost averaging is likely the best way to go, adding more when oversold and less when not, in absolute dollar terms.This way you're leveraging time AND momentum.

[garcvict]

Off topic, loving and living for the ink you two are sporting…and the continued amazing money education shared on this platform. ❤

[Danielle-zqkb]

I was expecting you to talk about when the entire market dips. I wish I had bought more in March 2020 when everything ‘dipped’ due to Covid. I did invest some money at that time and it paid off.

[Capture.Castle]

I bought the dip in 2020 and made 64% ROI.