Is This A Good Strategy - Should You Buy The Dip?

When a stock takes a dip, does that present a great opportunity to buy in - to buy the dip?

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Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.

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#buythedip #buynow

[antillie]

To me "buying the dip" means making sacrifices to temporarily increase how much you are DCA'ing in each month/week/whatever while the market is down. Once market prices recover you dial your investment rate back to normal and start doing whatever it was you stopped doing to allow you to invest more again. What constitutes a "dip" or "recovery" or how long you do this for is a very individualized choice. I only do this with broad market index funds as I don't feel owning individual stocks make sense for most people.

[mommytradertube]

I just DCA each paycheck! It's too stressful for me to try to time the market! Great video Erin!

[msaito]

In my case, I look for dividend stocks. If the company is good, with good indicators and good sustainable dividends, I will always buy a Dip. This is my strategy.

[tonyflaminio]

Dear ETM,
Congratulations on another excellent researched topic. I completely agree with using Dollar Cost Averaging. I agree that Market Timing is a recipe for disaster. Technical Analysis sounds great but which technical analysis do I follow, there are so many and the people pushing them always sound so convincing. For years I wanted or thought I could beat the market. I did sometimes but I lost some times if I was being honest. I’ve learned my lessons after being in the market for over 30 years. My advice is just buy the Market, passive index investing to your risk tolerance. Finance is Personal as you say, so make sure your are emotionally ok with your investments choices so you can sleep at night. Time in the Market wins every time, start investing now.
Thanks for reading,
Tony

[alexanderlyon]

I'm so glad you talked about _dollar cost averaging_ . I'm looking to do some non-tax-protected index fund investing and I'm going to start putting that in very soon. And I'll be in it for the long run, of course, and just put it in every month and not give it too much thought until a few years from retirement.

[rexstrom]

DCA is important if you don't have the time or inclination to do research. I resisted my son's advice to buy Tesla for about two years. It was too expensive. I have been buying shares for the last several weeks. Is this "buying the dip"? I suppose. I wasn't waiting for a dip. I just refused to buy overpriced stocks. Always remember, if it's an average, A LOT of people are doing better. If you want to be in that group, you need to do careful research.

[rogersmith]

« Time in the market beats timing the market » ─ Ken Fisher .. Thanks Erin ❤👍

[richardt]

I don't buy individual stocks but within my 401K I will have maybe 5% cash or another 10 or 15% in a target date fund. When the market dips 20-30%, I will move some money into the S & P or QQQ. I still have a few years before I will start RMD's. I have sufficient cash to last several years and next year I will start Social Security which should start at around $50K annually.

[williamfrench]

I say yes to buying the dip - to a degree and within reason. My investments have done very well and I have primarily followed the dollar cost averaging investment strategy. However, I also take advantage of market declines (i.e., 1987, 2000, 2008, 2020, and 2022) as a buying opportunity for my IRA diversified broad market index fund (i.e., VG Total Stock Market Index Fund). That said, I'm obviously buying the entire market at a relatively lower price point and then staying the course long-term with full faith in our free market economy! Keep up the good work Erin!

[gizmobowen]

Thank you for explaining this in an easy to understand way. It really feels like I'm buying the dip right now just because I keep putting money into my retirement fund. Hopefully the market turns around soon and I can realize all the great values I'm buying.
On a technical topic, when I watch your videos the brightness seems to fluctuate a lot. It seems like your camera's autoexposure system is making a lot of adjustments based on how the light is reflecting off you as you move. Maybe it's just me, but I'm wondering if setting the camera to a manual exposure setting would make the brightness more consistent. I hope I've written this in a way that is helpful and not critical.

[hanwagu]

Buying the dip is trying to time the market, which has a higher probability of failure. The problem with buying the dip is that you are keeping your money sidelined in an attempt to time the dip, so it's doing nothing to include not gaining any potential dividends. It is better to just DCA, which buys into the dip anyway.

[kevinmcnally]

I bought the dip in 2022 and I guess it is considered market timing (of sorts) but I am in it for the long haul. I moved some money from low interest treasuries and savings into my index funds when the market was down almost 30% in 2022. It came back a little to end the year down 20% or so, but I am in it for the long term so don't plan on selling anytime soon. I guess it was more of a change in asset allocation because savings/treasuries/bonds weren't paying much.

[wmb]

Never having had luck buying on a low, I have over the years moved directly towards low fee index funds. Many years ago, trying to take advantage of dividend reinvestments, I bought Exxon. A great blue chip stock. Then came the Exxon Valdez. So I heard BP was doing well, and growing, then came the Deep Water Horizon. I have found over the years my stomach can't take this kind of tumult. I no longer own any individual energy stocks. I want to like them, just can't take it.

[CalmerThanYouAre]

Big fan of remaining invested through the ups and downs. However, I think leveraging into dips of 20% or more is an excellent strategy for safely growing wealth faster.

It’s all about safely controlling as much capital as you can. Don’t leverage over 10 to 15%. And preferably have a lower volatility portfolio with an element of cash flow, such as a dividend growth index like SCHD.

No risk of a margin call due to the very low leverage ratio. Just buy low… with the bank’s money! No need to time the market to sell high!

Continue DCA as normal and reset to 10-15% leverage at the next 20% correction. Rinse and repeat. Keep an eye on margin interest rate and switch to repaying the margin with new capital if the rate temporarily gets too high. However, margin debt should always be the lowest cost of capital you can get.

[rustinteriors]

I totally agree with this! Timing the market is not an easy thing to do. Working in the investment industry, we always urge our clients away from emotional investing and trying to time the markets. The stock market always goes up over long periods of time. Great video, Erin! 😊

[akin]

I believe in buying the dip for diverse funds. I'm buying the S&P 500 & Large cap growth. Individual stocks scare me right now, and I'm not willing to devote the time to reseach each stock.

[hockeyfreak]

Theres buy the dip ONLY, and then there's dollar cost averaging PLUS BUYING EXTRA when theres a dip. I keep cash in addition to dollar cost averaging because liquidity means you can take advantage of opportunities.

[jhernan]

I think that you'll be even more successful if you can DCA and be able to put a little extra toward buying the Dip (presuming you're in low cost, broad-based index funds) when the market drops. I'll be hoping to do that this year, if those that are forecasting another down year are correct!. Great vid!

[FrankMularcik]

The best phrase in the video was "you should have a solid investment strategy for all times in the market." Exactly. And the part about the stock market on average, not all stocks, going up over time. There's a nuance there that a lot of people probably miss.

[trackguy]

You are a true Boglehead!!! Need you to present at a Bogleheads conference