This isn't about the potential outcome of current macro events on the stock market, this is more so about the people blindly spamming buy the dip.
My main concern with this advise is that their basis for the argument stems from the April dump where dip buying did in fact work at that time. But, my question is how do you extrapolate that to every dip?
The main concern I have with this idea is the small sample size and the lack of time since, it has not even been a year yet since the April drop (and other minor corrections since).
It seems like majority of the subreddit (or the loudest members) have not experienced a real bear market before, which I think is supported by the flood of bear posts every time the Nasdaq drops >.5%. But historically in a real bear market, recovery takes years, not days or weeks.
Dotcom high: March 2000 ~5,048
Next high: June 2015 ~ 5,137
15 years to recovery
A lot of stocks still have not recovered since covid, even though the focus on the next big tech wave has shifted.
This is not market advice & I'm firm believer that retail has not impact on highly liquid stocks, but I would be weary of blindly buying the dip. Don't end up trying to catch a falling knife.
Quantitative research on buying the dip:
https://www.aqr.com/Insights/Research/Alternative-Thinking/Hold-the-Dip
Posted by DefinitionOk3737
10 Comments
“Freak the fuck out. and panic sell everything right now. It’s fucking over.”
~ Warren Edward Buffet
If you buy quality companies at a discount, buying the dip is a great strategy. If you buy companies only on the speculation that they will make money in the future, you may not want to buy the dip.
Make sure you have enough cash to buy the dip with
Advise vs Advice
Look, there’s people on here that spam buy the dip, then there’s those that spam the next crash is twenty minutes away. Everyone acts like they know what they’re talking about, but in the end nobody knows shit as far as the outcomes of what really ends up happening. Everyone can agree that the older they get the more expensive everything becomes.
Buying the dip usually works, if the dip is just due to some temporary situation or a round of profit taking and not because of a substantial change in fundamentals. Occasionally, though, the dip is followed by a deeper dip and then an even deeper dip and you can end up down 50% or more (or wiped out if you use leverage).
Not buying the dip and assuming it’s the start of a bear market can be costly though too because usually it’s not the start of a bear, even if the market seems primed for a bear, and you can miss out on a lot of gains by not buying dips.
The bottom line is that there is risk in investing in the market and it’s very difficult to know whether a dip is just a dip or the start of a deep dive.
Buy the dip so this grossly overvalued market can keep growing while Trump will short the market and continue to laugh his ass off
I use stop losses to protect myself. I never try to catch a falling knife.
Richard Wyckoff and Jesse Livermore had a very good system for serious traders. The information is free and available on YouTube. It’s well worth watching if you are serious about trading.
Good luck
I use stop losses to protect myself. I never try to catch a falling knife.
Richard Wyckoff and Jesse Livermore had a very good system for serious traders. The information is free and available on YouTube. It’s well worth watching if you are serious about trading.
Good luck
Buy. Then buy more if it drops. Then buy more if it drops even more.