“Buying the Dip?”

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
sailaway
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Re: “Buying the Dip?”

Post by sailaway »

tooluser wrote: Sat Jun 18, 2022 6:52 pm I prefer making my own dip with a tub of sour cream, a packet of onion soup mix, and a little milk to thin it out just right. Perfect with plain Ruffles or Wavy Lays.

I'll probably get around to rebalancing again soon, but the asset classes don't seem to be signaling any method to do that in a predictable way, so there may be some selling involved as well.
Greek yogurt and everything bagel seasoning. Extra dried onions and garlic powder to taste.

We are missing this dip because we already front loaded 401k/MBR and are now rebuilding cash reserves. DH was originally told he would lose his 401k when he went part time, so it was the best decision with the information we had at the time.
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9-5 Suited
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Re: “Buying the Dip?”

Post by 9-5 Suited »

Unless I can tell the individual is using the phrase “buy the dip” as a synonym for “continue your normal investing plan when markets drop”, I consider the use of that phrase generally disqualifying when establishing who I will read or listen to as an expert.

Read or listen to Swedroe, Ferri, Bernstein, Felix, Roth, Bogle, etc and you are very unlikely to come across this phrase as a serious recommendation. It implies one knows where the dip is and can time it correctly, which I consider complete hogwash.
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Lee_WSP
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Re: “Buying the Dip?”

Post by Lee_WSP »

I've always wanted to know where the dip buyers are getting the money from if it's not part of a regular investment schedule.
pasadena
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Re: “Buying the Dip?”

Post by pasadena »

Since Sep 2021, when the "dip" kinda began:
- TSM down 10.56%
- S&P500 down 7.68%
- NASDAQ down 20%


YTD:
- TSM down 14.21%
- S&P500 down 12.78%
- NASDAQ down 25.83%


If "Buy the dip" people haven't bought this dip yet, if "dry powder" people still have dry powder, one has to wonder how deep the "dip" has to get for them to buy it, and if they ever will. I mean, at that point it probably wouldn't be a "dip" anymore.
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Raraculus
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Re: “Buying the Dip?”

Post by Raraculus »

Lee_WSP wrote: Tue Jun 21, 2022 5:49 pmI've always wanted to know where the dip buyers are getting the money from if it's not part of a regular investment schedule.
In my case, from my margin loan facility. :shock:
z3r0c00l
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Re: “Buying the Dip?”

Post by z3r0c00l »

pasadena wrote: Tue Jun 21, 2022 6:01 pm Since Sep 2021, when the "dip" kinda began:
- TSM down 10.56%
- S&P500 down 7.68%
- NASDAQ down 20%


YTD:
- TSM down 14.21%
- S&P500 down 12.78%
- NASDAQ down 25.83%


If "Buy the dip" people haven't bought this dip yet, if "dry powder" people still have dry powder, one has to wonder how deep the "dip" has to get for them to buy it, and if they ever will. I mean, at that point it probably wouldn't be a "dip" anymore.
Plenty of them did buy the dip already, they just don't talk about how they made a mistake.
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MadDwag
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Re: “Buying the Dip?”

Post by MadDwag »

pasadena wrote: Tue Jun 21, 2022 6:01 pm Since Sep 2021, when the "dip" kinda began:
- TSM down 10.56%
- S&P500 down 7.68%
- NASDAQ down 20%


YTD:
- TSM down 14.21%
- S&P500 down 12.78%
- NASDAQ down 25.83%


If "Buy the dip" people haven't bought this dip yet, if "dry powder" people still have dry powder, one has to wonder how deep the "dip" has to get for them to buy it, and if they ever will. I mean, at that point it probably wouldn't be a "dip" anymore.
Well if you’re like me in 2008-2009, you’d keep waiting and holding off. Huge mistake in hindsight.
WhiteMaxima
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Re: “Buying the Dip?”

Post by WhiteMaxima »

Dollar cost averaging in any market. Forget about buying at the bottom and selling at the top.
visualguy
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Re: “Buying the Dip?”

Post by visualguy »

z3r0c00l wrote: Tue Jun 21, 2022 5:11 pm So Japan had an Apocalypse with total collapse? The Yen didn't collapse, capitalism still exists there, people make money, there are 49 billionaires in Japan today. It is entirely possible for an economy to keep functioning reasonably well while the stock market declines for decades. It is especially likely after a bubble which we might have been in. You said "it may take a year, it may take a decade" but I am here to tell you it may take over 40 years. Many people here won't be alive in that time.
Yup - that's the scary thing. People extrapolate too much from the history up to now of US stock market performance.
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Re: “Buying the Dip?”

Post by z3r0c00l »

visualguy wrote: Wed Jun 22, 2022 1:55 am
z3r0c00l wrote: Tue Jun 21, 2022 5:11 pm So Japan had an Apocalypse with total collapse? The Yen didn't collapse, capitalism still exists there, people make money, there are 49 billionaires in Japan today. It is entirely possible for an economy to keep functioning reasonably well while the stock market declines for decades. It is especially likely after a bubble which we might have been in. You said "it may take a year, it may take a decade" but I am here to tell you it may take over 40 years. Many people here won't be alive in that time.
Yup - that's the scary thing. People extrapolate too much from the history up to now of US stock market performance.
Good news is we can add pensions, annuities, social security, home equity, bonds, cash to our planning. It is a good idea to have these things to build out the base of your pyramid so if stocks don't recover, you can still have a reasonably happy life.
70% Global Stocks / 25% Bonds / 5% cash
visualguy
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Re: “Buying the Dip?”

Post by visualguy »

z3r0c00l wrote: Wed Jun 22, 2022 4:33 am
visualguy wrote: Wed Jun 22, 2022 1:55 am
z3r0c00l wrote: Tue Jun 21, 2022 5:11 pm So Japan had an Apocalypse with total collapse? The Yen didn't collapse, capitalism still exists there, people make money, there are 49 billionaires in Japan today. It is entirely possible for an economy to keep functioning reasonably well while the stock market declines for decades. It is especially likely after a bubble which we might have been in. You said "it may take a year, it may take a decade" but I am here to tell you it may take over 40 years. Many people here won't be alive in that time.
Yup - that's the scary thing. People extrapolate too much from the history up to now of US stock market performance.
Good news is we can add pensions, annuities, social security, home equity, bonds, cash to our planning. It is a good idea to have these things to build out the base of your pyramid so if stocks don't recover, you can still have a reasonably happy life.
Correct, and this has been my motivation to invest in real estate in addition to stock.
Bud
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Re: “Buying the Dip?”

Post by Bud »

John Bogle might never have said "Buy the dip", but he discussed and believed in "reversion to the mean" - the link below is well worth the read as are all of Bogle's papers.

http://johncbogle.com/wordpress/wp-cont ... t-1-98.pdf

DCA into the Nikkei index and the investor would have turned out just fine - even if the market indexes do not advance, people who DCA benefit.

https://www.afrugaldoctor.com/home/japa ... nikkei-225

All the best.
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TheTimeLord
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Re: “Buying the Dip?”

Post by TheTimeLord »

As per usual I see things a bit differently than most. From my perspective "Buying the dip" is buying a very short term single digit pullback whereas "Buying the Decline" would be buying a larger double digit move from the ATH. I see "Buying the Dip" as a Bull market thing and "Buying the Decline" is a Bear Market and Correction activity. Problem is some dip buyers keep buying dips over and over until we are in a decline and they are out of dry powder. Personally, I will buy dips, but once the dip turns into a trend I stop dip buying and start looking for the point at which I would buy the decline. Honestly, I am not sure if buying the decline varies much from using rebalancing bands in a downturn. But I guess everyone sees these things in their own way.
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Chuck
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Re: “Buying the Dip?”

Post by Chuck »

Were you buying the dip in December 2020 when the S&P was at the same price?
incognito_man
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Re: “Buying the Dip?”

Post by incognito_man »

Chuck wrote: Wed Jun 22, 2022 10:10 am Were you buying the dip in December 2020 when the S&P was at the same price?
Well, to compare apples to apples, a year and a half ago an equivalent "dip" would correspond to a roughly 11% lower index value.
H-Town
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Re: “Buying the Dip?”

Post by H-Town »

Lee_WSP wrote: Tue Jun 21, 2022 5:49 pm I've always wanted to know where the dip buyers are getting the money from if it's not part of a regular investment schedule.
Mine is typically from raise and bonus. I also dip into cash reserve to buy stocks during market crash. When market goes up, I just slowly replenish the cash reserve from monthly cash inflow.
Time is the ultimate currency.
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sgr000
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Re: “Buying the Dip?”

Post by sgr000 »

tennisplyr wrote: Sat Jun 18, 2022 6:32 pmSo who’s buying the dip or is this time different? I saw a headline in a local newspaper saying that Buying the Dip might be out of fashion.
I wouldn't quite call it "buying the dip", but I did rebalance into stocks a bit. I make more or less quarterly withdrawals, and do it in a way that pretty much constitutes a rebalance. (Though since bonds are falling too, the asset allocation was less out of whack than in declines of the recent past.)

I look forward to rebalancing back out of stocks on the return trip.

Is it out of fashion? I dunno. I'm pretty much fashion-incompetent, anyway.
strummer6969
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Re: “Buying the Dip?”

Post by strummer6969 »

I think dip buyers have already gone through their couch cushions and invested every last nickel and penny. There have been numerous opportunities for dip buying over the past 6 months.
Miguelito
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Re: “Buying the Dip?”

Post by Miguelito »

Lee_WSP wrote: Tue Jun 21, 2022 5:49 pm I've always wanted to know where the dip buyers are getting the money from if it's not part of a regular investment schedule.
Good question. I think those who had money to invest may be lucky to have had money at the right time. Bonus, inheritance, sale of a car or boat, etc. But the point there is, do you lump sum, or do you DCA?

I've been DCA'ing since mid April and so far I'm in for 1/2 what I had to invest. Days like yesterday make me wonder if that was the bottom and I missed my chance. Then there are days when the market sinks another 2-3% and I regret prior investments. So far DCA has been a reasonably good move. I will probably continue doing that but may wait a little longer to invest since recent data seems to support a recession.
livesoft
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Re: “Buying the Dip?”

Post by livesoft »

Lee_WSP wrote: Tue Jun 21, 2022 5:49 pm I've always wanted to know where the dip buyers are getting the money from if it's not part of a regular investment schedule.
So are you one of those 100% equity investors? Do you have any bond funds or other fixed income funds at all that you could sell to get cash to buy equity funds?

Buying the dip is a just another form of rebalancing.
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Lee_WSP
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Re: “Buying the Dip?”

Post by Lee_WSP »

livesoft wrote: Wed Jun 22, 2022 4:09 pm
Lee_WSP wrote: Tue Jun 21, 2022 5:49 pm I've always wanted to know where the dip buyers are getting the money from if it's not part of a regular investment schedule.
So are you one of those 100% equity investors? Do you have any bond funds or other fixed income funds at all that you could sell to get cash to buy equity funds?

Buying the dip is a just another form of rebalancing.
Yes, I'm relatively young, but to the point, rebalancing is not what I picture when I think of retail investors buying the dip. And furthermore, there's no rebalancing to be done in today's market.
carminered2019
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Re: “Buying the Dip?”

Post by carminered2019 »

I buy the dip with bond money. I was 70/30 before the correction but my current AA now is about 89/11(Emergency cash). I am Currently listing to sell my expensive sport car to throw more money into the markets but will never use my EF(10 years) to buy the dip.
Last edited by carminered2019 on Wed Jun 22, 2022 4:59 pm, edited 3 times in total.
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Abe
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Re: “Buying the Dip?”

Post by Abe »

MtnRetreat wrote: Mon Jun 20, 2022 11:46 am It all depends on your timeline. If you have at least 5 years before needing the money, I'd buy the dip.

Here's my theory:

Imagine a simple V shaped market that goes down to the bottom, then comes up. Now imagine you know when the bottom happens when it does, and you know the market (or the particular investment) will come back up. Let's assume numbers of the market starts at 100, dips to about 60, then comes back to 100 eventually.

On the day of the bottom you are happy to buy at 60. At your next paycheck you are happy to buy at 62. A few months later you are happy to buy at 70, then 75. A couple months later you are happy to buy at 80. A year later you are happy to buy at 99, then 100.

Since you know the market will be back to 100, you are happy to buy cheaper than that.

We don't know where or when the bottom will be, but (presuming a diversified portfolio) we know it will eventually come back to where it is today. So every time you buy below where it is today you will eventually profit. If you are happy buying on the way up, you should be happy buying on the way down at 99, 80, 75, 70, 62, and 60.

The only difference is time, but eventually it will come back up.

If you have a crystal ball, put your money today into something 100% safe, and then on the day of the bottom put it all into the market. The only way to do this is Pure Luck.

As a retiree I am being defensive, but if you are younger play the long game. Pay off high interest debt, get the company 401k match, and buy into a diversified portfolio.
The big unknown is the time factor as you pointed out. The market can, and has in the past, stayed relatively flat for very long periods of time (example: 1966 to 1988). So if you had bought at the lowest point of 60 and waited 10 years to get back to 100, you would have had an annual return of about 5.25%.
Slow and steady wins the race.
dertere
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Re: “Buying the Dip?”

Post by dertere »

z3r0c00l wrote: Tue Jun 21, 2022 5:11 pm
MtnRetreat wrote: Tue Jun 21, 2022 5:06 pm
tennisplyr wrote: Tue Jun 21, 2022 6:47 am
Some will say : what if it doesn’t come back up?
Then we are all in deep, deep trouble! Something truly catastrophic has happened. The Zombie Apocalypse. Total collapse of the US government and the US dollar. Total grid-down for years.

Otherwise the market always comes back over time. It may take a year, it may take a decade. People want to run businesses, to make money, to accumulate wealth. Unless capitalist activity is not possible, the market will come back.
So Japan had an Apocalypse with total collapse? The Yen didn't collapse, capitalism still exists there, people make money, there are 49 billionaires in Japan today. It is entirely possible for an economy to keep functioning reasonably well while the stock market declines for decades. It is especially likely after a bubble which we might have been in. You said "it may take a year, it may take a decade" but I am here to tell you it may take over 40 years. Many people here won't be alive in that time.
I'm not trying to take away from the wider point that Japan is a case study that needs to be kept in mind when thinking about long term returns, but in the context of "buying the dip" we are at a point where post-peak buy and hold investors who bought into the Nikkei 225 after August 1990 would generally have positive returns. That does mean that shares bought in the beginning of the "dip" all the way down to -36% are generally still in the red.

(Caveat, I'm not calculating for dividends or inflation, this is just a quick rule of thumb observation from looking at a price chart)
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Re: “Buying the Dip?”

Post by AnnetteLouisan »

For dip, I like a specialty brand called Roots hummus and a tomato/corn salsa called Cowboy Caviar. Great with baby carrots or sesame seed crackers.

For buying US equity funds outside my retirement accounts, as a rank newbie, I averaged investing $6.5k per month YTD by allocating assets tactically, my last purchase being VTI at $181.80. In my case it’s like a version of DCA. It was an extremely positive experience to build upon, despite it being a volatile time to start investing, hopefully doing lump sums in the future so I can pay less attention to the markets.

I’m continuing to buy a few times a month, using salary and bank savings, in an effort to grow my taxable account into a little extra fund for my late 60s and 70s. If I keep contributing the same or more for five years, it could grow over the next ten to a nice amount. I wonder if I’d have had the courage to buy as much if it had continued rising all this time.
Last edited by AnnetteLouisan on Thu Jun 23, 2022 8:07 am, edited 4 times in total.
barberakb
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Re: “Buying the Dip?”

Post by barberakb »

Lee_WSP wrote: Tue Jun 21, 2022 5:49 pm I've always wanted to know where the dip buyers are getting the money from if it's not part of a regular investment schedule.
I get most of mine from the cash flow on my rental properties.
schwank
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Re: “Buying the Dip?”

Post by schwank »

I can't claim to buy the dip but was lucky as I TLH out of both ITOT and VTI, then the market had a further blip while in was waiting 30 days. I sold a further lot of ITOT and then coincidentally put it into VTI when the market hit its recent low. It's up a few percent since then but who knows.

I like to buy low but my comp is tied to company shares so it's a double edged sword. I just have to stay the course.
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Re: “Buying the Dip?”

Post by Marjimmy »

carminered2019 wrote: Wed Jun 22, 2022 4:49 pm I buy the dip with bond money. I was 70/30 before the correction but my current AA now is about 89/11(Emergency cash). I am Currently listing to sell my expensive sport car to throw more money into the markets but will never use my EF(10 years) to buy the dip.
I want to sell my Tesla Model 3 for $$$ to dump into it. But I can't :twisted:
Best of luck to you and your courage.
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Re: “Buying the Dip?”

Post by RadAudit »

livesoft wrote: Wed Jun 22, 2022 4:09 pm Buying the dip is a just another form of rebalancing.
After retirement, I put the majority of the portfolio into two funds - VSMGX and VSCGX. (Couldn't decide.) I have a targeted portfolio AA of 50/50 stocks/bonds. The IPS says rebalance the portfolio when one fund varies from the other by more than 5%. So far that hasn't happened. At the fund level within the portfolio, VG is rebalancing each fund as they see fit to maintain their targets. So, yes. I'm buying the dip, selling the rip, staying the course ... and a few more other descriptive phrases of generally recommended market behaviors. At the portfolio level, the total value just goes up and down with the markets world wide. Seems OK so far. YMMV.
Last edited by RadAudit on Thu Jun 23, 2022 4:21 pm, edited 1 time in total.
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MtnRetreat
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Re: “Buying the Dip?”

Post by MtnRetreat »

z3r0c00l wrote: Tue Jun 21, 2022 5:11 pm
MtnRetreat wrote: Tue Jun 21, 2022 5:06 pm
tennisplyr wrote: Tue Jun 21, 2022 6:47 am
Some will say : what if it doesn’t come back up?
Then we are all in deep, deep trouble! Something truly catastrophic has happened. The Zombie Apocalypse. Total collapse of the US government and the US dollar. Total grid-down for years.

Otherwise the market always comes back over time. It may take a year, it may take a decade. People want to run businesses, to make money, to accumulate wealth. Unless capitalist activity is not possible, the market will come back.
So Japan had an Apocalypse with total collapse? The Yen didn't collapse, capitalism still exists there, people make money, there are 49 billionaires in Japan today. It is entirely possible for an economy to keep functioning reasonably well while the stock market declines for decades. It is especially likely after a bubble which we might have been in. You said "it may take a year, it may take a decade" but I am here to tell you it may take over 40 years. Many people here won't be alive in that time.
If the US market doesn't come back for 40 years then our biggest problem is not the market. Something very big has happened to cause that. Which is my point. The USA is a world leader in so many areas that if we are down for decades then either the entire world is down or the world has left us behind.

Agreed the timeline is unknown for any down cycle. I, personally, am pretty pessimistic. A big reset is needed, and not the kind we hear the elites blabbering about. Having said that, diversification includes strategy, plus human nature must be considered. If one tailors their entire financial structure to the belief the market is going to crash far and for a long time, but then it doesn't happen, they have lost a lot. Additionally, when one stops saving for the future it becomes very difficult to both not waste the money and resume saving later. I would suggest people at least 20 years from retirement keep saving full steam ahead. Now if they would be disciplined perhaps it would make sense to hold back some in cash to take advantage of bargains in the future such as cheap rental real estate or stocks at 50% lower. Most people just spend the money on junk though.
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Re: “Buying the Dip?”

Post by z3r0c00l »

MtnRetreat wrote: Thu Jun 23, 2022 2:25 pm

If the US market doesn't come back for 40 years then our biggest problem is not the market. Something very big has happened to cause that. Which is my point. The USA is a world leader in so many areas that if we are down for decades then either the entire world is down or the world has left us behind.
Essentially I am saying the market is not the economy. The Japanese economy has remained okay, not great, but stocks are still far short of where they were in 1989. Still the #3 economy, per-capita GDP higher than South Korea, and life expectancy and other measures of living conditions one of the highest in the world.
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MichRoots
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Re: “Buying the Dip?”

Post by MichRoots »

I continue to move asset allocation out of stable value into SP500 index. About every 150 point drop, I move more cash. Now at 82% sp500 index and 18% stable since last Thursday when SP was around 3665. I might not get any higher but if the market drops I consider that an opportunity. My 100% sp500 allocation would probably be if SP drops to 3220 (or whatever it was on Dec 31, 2019). If we drop to 3386 (pre pandemic high I would like to be at 90% sp500.
tomdickorharry
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Re: “Buying the Dip?”

Post by tomdickorharry »

I'm buying the dip in the form of simply increasing my contributions. If I was willing to buy at price x, then I'm obviously willing to buy at price x/2. And since this will be a long term increase, I should still enjoy the relative safety of DCA while allowing myself a chance to get more per dollar IF this is actually a dip in value, and not just a lower expensive price.

If there is actually no dip happening, well then I simply increased my retirement contributions which is still a good idea for me.
livesoft
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Re: “Buying the Dip?”

Post by livesoft »

I guess it was a bona fide Dip since stocks seem to have rebounded a few percent. Everybody pat themselves on the back!
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