Do Bogleheads "Buy the Dip"?

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dataentryspecialist
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Re: Do index investors "Buy the Dip"?

Post by dataentryspecialist »

I got tired of ending up with too much cash (I’m in accumulation phase) waiting for a “down day” to invest. I now view cash as part of my asset allocation, and regular purchases as rebalancing. Waiting to time the market is an almost sure way to underperform the market. This is one of the great many reasons people underperform long term.
carminered2019
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Re: Do index investors "Buy the Dip"?

Post by carminered2019 »

dataentryspecialist wrote: Sun Feb 04, 2024 2:59 pm I got tired of ending up with too much cash (I’m in accumulation phase) waiting for a “down day” to invest. I now view cash as part of my asset allocation, and regular purchases as rebalancing. Waiting to time the market is an almost sure way to underperform the market. This is one of the great many reasons people underperform long term.
So why didn't you go all-in March 2020 when the markets dropped 30%+ ?
tibbitts
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Re: Do index investors "Buy the Dip"?

Post by tibbitts »

carminered2019 wrote: Sun Feb 04, 2024 3:03 pm
dataentryspecialist wrote: Sun Feb 04, 2024 2:59 pm I got tired of ending up with too much cash (I’m in accumulation phase) waiting for a “down day” to invest. I now view cash as part of my asset allocation, and regular purchases as rebalancing. Waiting to time the market is an almost sure way to underperform the market. This is one of the great many reasons people underperform long term.
So why didn't you go all-in March 2020 when the markets dropped 30%+ ?
Well, I don't remember exactly but at the time I recall there was widespread belief that the odds were extremely high that there would be a second and more severe leg down after another few months. So that might be one reason. Once I had decided to start moving some money once the market got to 20% down and of courrse the market got to something like 19.8% and that was the end of the downturn.
Topic Author
followtheplan
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Re: Do index investors "Buy the Dip"?

Post by followtheplan »

tibbitts wrote: Sun Feb 04, 2024 11:48 am The thread subject should be Do Bogleheads "Buy the Dip?", because "index investors" (as in ETFs etc.) incorporate people who have completely different philosophies.
I updated it for clarity. Thanks for pointing it out.
WhitePuma
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Re: Do index investors "Buy the Dip"?

Post by WhitePuma »

livesoft wrote: Sat Feb 03, 2024 8:22 am
followtheplan wrote: Sat Feb 03, 2024 8:00 am...
With that said, do any of you keep a cash reserve to take advantage of times like these? If the market were to be down a large percentage* and you had the funds available, and God willing, the years (decades) to wait for a recovery do you have this worked into your investment plan?
No,I do not keep a cash reserve to take advantage of buying equities lower. Nevertheless, I do buy equities lower. How is this possible you may ask? The answer is EASY: I sell some of my fixed income holdings and use the proceeds to buy equities. Some folks call this Market Timing Rebalancing. I do this in a tax-deferred account which has both equity and fixed income investments.

Some recent "rebalancing" trades:
Equity (AVUV)
Image

Bond (BND):
Image

Do you see how no cash reserve is necessary?

(Also these rebalancing transactions were already mentioned by me in another thread: viewtopic.php?p=7688634#p7688634 )
I’m confused. You sold BND and bought it the next day. You didn’t know the price would drop. How is this not marketing timing?
livesoft
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Re: Do index investors "Buy the Dip"?

Post by livesoft »

WhitePuma wrote: Sun Feb 04, 2024 5:34 pmI’m confused. You sold BND and bought it the next day. You didn’t know the price would drop. How is this not marketing timing?
I sold BND in order to raise cash to buy AVUV. I did not expect BND to drop 1%. I had no expectation of what BND was going to do.

Then since BND dropped 1% the next day (a big drop for a bond fund), I was compelled by my IPS to buy BND, So I looked in my portfolio for how to raise cash to buy BND. Conveniently VTI was up more than 1% at the same time that BND was down more than 1%, so I sold some VTI to get the cash to buy BND.

If you want to call it market timing, then that's perfectly OK with me. But don't forget that with bona fide Market Timing on bogleheads.org one is supposed to lose money. Since I made money I could not have possibly been doing Market Timing.

BTW, I may sell that BND if it goes up by 1% tomorrow. :twisted: And I may sell AVUV if it goes up by 3% tomorrow.
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barcharcraz
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Re: Do index investors "Buy the Dip"?

Post by barcharcraz »

tibbitts wrote: Sun Feb 04, 2024 3:08 pm
carminered2019 wrote: Sun Feb 04, 2024 3:03 pm
dataentryspecialist wrote: Sun Feb 04, 2024 2:59 pm I got tired of ending up with too much cash (I’m in accumulation phase) waiting for a “down day” to invest. I now view cash as part of my asset allocation, and regular purchases as rebalancing. Waiting to time the market is an almost sure way to underperform the market. This is one of the great many reasons people underperform long term.
So why didn't you go all-in March 2020 when the markets dropped 30%+ ?
Well, I don't remember exactly but at the time I recall there was widespread belief that the odds were extremely high that there would be a second and more severe leg down after another few months. So that might be one reason. Once I had decided to start moving some money once the market got to 20% down and of courrse the market got to something like 19.8% and that was the end of the downturn.
When stocks go down by 20% there will _always_ be a widespread belief they will go down more, assuming the crash is driven by real events and not some market structure issue. If you're holding cash the idea is to start buying exactly when this belief is widespread. But, ofc I did the same thing.
Northern Flicker
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Re: Do index investors "Buy the Dip"?

Post by Northern Flicker »

livesoft wrote: Sun Feb 04, 2024 5:46 pm If you want to call it market timing, then that's perfectly OK with me. But don't forget that with bona fide Market Timing on bogleheads.org one is supposed to lose money. Since I made money I could not have possibly been doing Market Timing.
I'm not aware of a position that one must lose money by market timing. Market timing takes uncompensated risk. You are as likely to win as to lose a timing bet, but there is no increased expected return to compensate for the risk of losing the bet.
Blogian
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Re: Do Bogleheads "Buy the Dip"?

Post by Blogian »

If you hold any x/ypct stock bond fund, you're actually atomatically buying dips and selling peaks, imo the best trading algo.
livesoft
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Re: Do index investors "Buy the Dip"?

Post by livesoft »

Northern Flicker wrote: Sun Feb 04, 2024 11:24 pm
livesoft wrote: Sun Feb 04, 2024 5:46 pm If you want to call it market timing, then that's perfectly OK with me. But don't forget that with bona fide Market Timing on bogleheads.org one is supposed to lose money. Since I made money I could not have possibly been doing Market Timing.
I'm not aware of a position that one must lose money by market timing. Market timing takes uncompensated risk. You are as likely to win as to lose a timing bet, but there is no increased expected return to compensate for the risk of losing the bet.
I'm losing money today because AVUV is dropping more than VTI. :(. OTOH, BND and VTI have dropped about the same amount.
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simpleisbest
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Re: Do Bogleheads "Buy the Dip"?

Post by simpleisbest »

I don't hold a constant AA, I rationally react to market prices and buy things that are good value.

When EDV crashed to $63, I was loading up, and then it rocketed up to $82 in 30 days, clobbering VTI.

People always say stocks beat bonds, but that's not true at all. It all depends on the timing.

If you never react to market prices, then you're never maximizing your value. Markets only become efficient through people reacting to prices. But if nobody reacts to prices, then markets remain inefficient. Inefficient markets can be gamed for profit.

If the price of gas goes up, you try to buy less gas. If the price of houses drops, you are more likely to buy a house. If the Euro is down, you are more likely to take a vacation to Europe. If one store sells eggs for $8/dozen and another store sells the exact same eggs for $4/dozen, you go to the cheaper store. If you react to prices in every other arena of your life, why wouldn't you react to prices in securities?
rule of law guy
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Re: Do Bogleheads "Buy the Dip"?

Post by rule of law guy »

define dip.

we buy a little bit after a 10% drop from a previous high. if it continues to drop, buy more heavily after a 20% dip. after that, play it by ear. we did not have a significant equity portfolio during the GFC, were still paying off college, mortgage etc so I dont know what we would have done then. we have about 70% short term treasuries and 30% equity, mostly SPY. so we are conservative
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SB1234
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Re: Do Bogleheads "Buy the Dip"?

Post by SB1234 »

simpleisbest wrote: Mon Feb 05, 2024 9:48 am I don't hold a constant AA, I rationally react to market prices and buy things that are good value.

When EDV crashed to $63, I was loading up, and then it rocketed up to $82 in 30 days, clobbering VTI.

People always say stocks beat bonds, but that's not true at all. It all depends on the timing.

If you never react to market prices, then you're never maximizing your value. Markets only become efficient through people reacting to prices. But if nobody reacts to prices, then markets remain inefficient. Inefficient markets can be gamed for profit.

If the price of gas goes up, you try to buy less gas. If the price of houses drops, you are more likely to buy a house. If the Euro is down, you are more likely to take a vacation to Europe. If one store sells eggs for $8/dozen and another store sells the exact same eggs for $4/dozen, you go to the cheaper store. If you react to prices in every other arena of your life, why wouldn't you react to prices in securities?
Prices of securities aren't like prices of day to day goods. Security prices are more like lottery tickets where the future payoff is unknown. Just because a security had dropped in value doesn't mean it's better value today than it was yesterday.
The fact that your trade in edv paid off is not any kind of proof of sound strategy.
You made a profit on edv because inflation expectations came down. But you didn't have any extra knowledge that they would when you bought it.
You made a bet and it paid off. You can make similar bets in Vegas.
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Chuckles960
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Re: Do Bogleheads "Buy the Dip"?

Post by Chuckles960 »

simpleisbest wrote: Mon Feb 05, 2024 9:48 am If the price of gas goes up, you try to buy less gas. If the price of houses drops, you are more likely to buy a house. If the Euro is down, you are more likely to take a vacation to Europe. If one store sells eggs for $8/dozen and another store sells the exact same eggs for $4/dozen, you go to the cheaper store. If you react to prices in every other arena of your life, why wouldn't you react to prices in securities?
A ridiculous analogy. Gas, eggs, vacations, etc. are purchased to be consumed in the short term, not as investments to be held.

For the latter, one must "react" not to what the current price is, but to whether one thinks it will go up or down in future. A completely different criterion, and no, the current price does not tell you the future price.

Plus, almost all stock prices are higher than they used to be, say, 10 years ago. There are very few "dips" over that period, and you don't want to buy those. By "buy the dip" people mean catching short-term fluctuations, but those are the ones that aren't predictable.
Last edited by Chuckles960 on Mon Feb 05, 2024 12:27 pm, edited 2 times in total.
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BrooklynInvest
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Re: Do Bogleheads "Buy the Dip"?

Post by BrooklynInvest »

Not me.

I don't buy the dip. I don't keep "dry powder." I don't try to time the market, sectors, or factors or analyze the opportunities in individual stocks.

Warren Buffett does, and he's made billions of dollars doing it. But unlike me he's really, really smart.
csr
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Re: Do Bogleheads "Buy the Dip"?

Post by csr »

Chuckles960 wrote: Mon Feb 05, 2024 12:06 pm A ridiculous analogy. Gas, eggs, vacations, etc. are purchased to be consumed in the short term, not as investments to be held.
Plenty of people buy and sell stocks in the short term. And the vast majority of market action is short term trading not to be held.
Chuckles960
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Re: Do Bogleheads "Buy the Dip"?

Post by Chuckles960 »

csr wrote: Tue Feb 06, 2024 12:56 am
Chuckles960 wrote: Mon Feb 05, 2024 12:06 pm A ridiculous analogy. Gas, eggs, vacations, etc. are purchased to be consumed in the short term, not as investments to be held.
Plenty of people buy and sell stocks in the short term. And the vast majority of market action is short term trading not to be held.
Do they consume those stocks? Or are the eggs, gas and vacations being traded (resold) rather than used/eaten?
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followtheplan
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Re: Do Bogleheads "Buy the Dip"?

Post by followtheplan »

rule of law guy wrote: Mon Feb 05, 2024 10:05 am define dip.

we buy a little bit after a 10% drop from a previous high. if it continues to drop, buy more heavily after a 20% dip. after that, play it by ear. we did not have a significant equity portfolio during the GFC, were still paying off college, mortgage etc so I dont know what we would have done then. we have about 70% short term treasuries and 30% equity, mostly SPY. so we are conservative
20%, 30% or more...

I'm also talking in terms of buying an index fund rather than gambling on individual stocks.
Target2019
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Re: Do Bogleheads "Buy the Dip"?

Post by Target2019 »

followtheplan wrote: Tue Feb 06, 2024 7:35 am
rule of law guy wrote: Mon Feb 05, 2024 10:05 am define dip.

we buy a little bit after a 10% drop from a previous high. if it continues to drop, buy more heavily after a 20% dip. after that, play it by ear. we did not have a significant equity portfolio during the GFC, were still paying off college, mortgage etc so I dont know what we would have done then. we have about 70% short term treasuries and 30% equity, mostly SPY. so we are conservative
20%, 30% or more...

I'm also talking in terms of buying an index fund rather than gambling on individual stocks.
I'm not the individual you replied to...

I read your posts, and a few others. When you have a very general question (buy the dips, or "keeping dry powder") the answers vary by philosophy. I know what the prescribed answer is here (don't ever do that), but there are other opinions. I use a hybrid approach, say I am 80% passive-index, and 20% something else. I am probably 30-40 years older than you.

All of our retirement accounts are passive index only. For just 10 years we've had a taxable brokerage account which is the 20% I mentioned earlier. We used this for the roof, a car, and some tuition payment in the past. Now it pays our home real-estate tax. But 40% of that account is money-market. So we can cash out, lose the 5% yield, and accomplish a goal.

Your twist is that you want to take 10-20% of your big-purchase fund and use an index to *possibly* get a better return. We have more than enough, and can test the investing waters. WHen you do this, please look at the results of that index fund you use, and see that it is not always climbing higher.

If you still think this is a smart idea, halve that 10% you mentioned, and buy on the next dip. Unfortunately, you could see that after the 20-30% dip it takes much longer than expected to get back to even. A cold hard fact is that the average results for recovery do not apply to our individual timing decision(s). And then we need the money...
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followtheplan
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Re: Do Bogleheads "Buy the Dip"?

Post by followtheplan »

Target2019 wrote: Tue Feb 06, 2024 8:26 am
followtheplan wrote: Tue Feb 06, 2024 7:35 am
rule of law guy wrote: Mon Feb 05, 2024 10:05 am define dip.

we buy a little bit after a 10% drop from a previous high. if it continues to drop, buy more heavily after a 20% dip. after that, play it by ear. we did not have a significant equity portfolio during the GFC, were still paying off college, mortgage etc so I dont know what we would have done then. we have about 70% short term treasuries and 30% equity, mostly SPY. so we are conservative
20%, 30% or more...

I'm also talking in terms of buying an index fund rather than gambling on individual stocks.
I'm not the individual you replied to...

I read your posts, and a few others. When you have a very general question (buy the dips, or "keeping dry powder") the answers vary by philosophy. I know what the prescribed answer is here (don't ever do that), but there are other opinions. I use a hybrid approach, say I am 80% passive-index, and 20% something else. I am probably 30-40 years older than you.

All of our retirement accounts are passive index only. For just 10 years we've had a taxable brokerage account which is the 20% I mentioned earlier. We used this for the roof, a car, and some tuition payment in the past. Now it pays our home real-estate tax. But 40% of that account is money-market. So we can cash out, lose the 5% yield, and accomplish a goal.

Your twist is that you want to take 10-20% of your big-purchase fund and use an index to *possibly* get a better return. We have more than enough, and can test the investing waters. WHen you do this, please look at the results of that index fund you use, and see that it is not always climbing higher.

If you still think this is a smart idea, halve that 10% you mentioned, and buy on the next dip. Unfortunately, you could see that after the 20-30% dip it takes much longer than expected to get back to even. A cold hard fact is that the average results for recovery do not apply to our individual timing decision(s). And then we need the money...
Thank you! Appreciate the insight.
simpleisbest
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Re: Do Bogleheads "Buy the Dip"?

Post by simpleisbest »

SB1234 wrote: Mon Feb 05, 2024 10:18 am
simpleisbest wrote: Mon Feb 05, 2024 9:48 am I don't hold a constant AA, I rationally react to market prices and buy things that are good value.

When EDV crashed to $63, I was loading up, and then it rocketed up to $82 in 30 days, clobbering VTI.

People always say stocks beat bonds, but that's not true at all. It all depends on the timing.

If you never react to market prices, then you're never maximizing your value. Markets only become efficient through people reacting to prices. But if nobody reacts to prices, then markets remain inefficient. Inefficient markets can be gamed for profit.

If the price of gas goes up, you try to buy less gas. If the price of houses drops, you are more likely to buy a house. If the Euro is down, you are more likely to take a vacation to Europe. If one store sells eggs for $8/dozen and another store sells the exact same eggs for $4/dozen, you go to the cheaper store. If you react to prices in every other arena of your life, why wouldn't you react to prices in securities?
Prices of securities aren't like prices of day to day goods. Security prices are more like lottery tickets where the future payoff is unknown. Just because a security had dropped in value doesn't mean it's better value today than it was yesterday.
The fact that your trade in edv paid off is not any kind of proof of sound strategy.
You made a profit on edv because inflation expectations came down. But you didn't have any extra knowledge that they would when you bought it.
You made a bet and it paid off. You can make similar bets in Vegas.
Securities as lottery tickets doesn't change the fact that if the price of lottery tickets goes on sales, those tickets become better deals. The payoff will be what it will be, so if you can snag it at a lower price, that's better.

The fact my profit on edv paid off is evidence that markets aren't efficient. If markets were efficient, security prices wouldn't be so volatile, overshooting targets, and then snapping back violently. They'd more smoothly adjust to their targets. Volatility is evidence of inefficencies. Somewhere in the middle of the volatile range the price lands on its efficient number, but then it's always overshooting that number and swinging to be either too low or too high.

If more people actively traded, there would be less inefficiency. As soon as the price deviates from its efficient level, active traders would immediately correct it back to efficient equilibrium. The fact that it doesn't is evidence that there is massive inefficiency that can be exploited by active trading.
filbert
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Re: Do Bogleheads "Buy the Dip"?

Post by filbert »

I think I understand your question. If you have reserved cash earmarked for an expense that is not necessary, do you use that money to buy the dip? I can say that idea has tempted me in the past. During the Covid Cash we had about 100K we were saving for an inground pool and the market tanked. We certainly thought about buying the dip at that time and then taking it back out later (1-2 years) to put the pool in then. I think this works as long as you're okay with worst case scenario. For us worst case would have been a 10 year downturn in the market resulting in us never getting the pool until our kids were out of the house. We were not willing to take that risk and we put the pool in. No regrets!! We used the pool a ton as all public pools were closed that summer and gathering outside was a safe way to get together with friends/family. However, if we would have waited a year (market did come back quickly) the cost of the pool went up about the same amount we would have made. So unfortunately, I have to agree with the majority, put it in early and often. Sometimes the enemy of good is better.
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SB1234
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Re: Do Bogleheads "Buy the Dip"?

Post by SB1234 »

simpleisbest wrote: Tue Feb 06, 2024 9:24 am
SB1234 wrote: Mon Feb 05, 2024 10:18 am
simpleisbest wrote: Mon Feb 05, 2024 9:48 am I don't hold a constant AA, I rationally react to market prices and buy things that are good value.

When EDV crashed to $63, I was loading up, and then it rocketed up to $82 in 30 days, clobbering VTI.

People always say stocks beat bonds, but that's not true at all. It all depends on the timing.

If you never react to market prices, then you're never maximizing your value. Markets only become efficient through people reacting to prices. But if nobody reacts to prices, then markets remain inefficient. Inefficient markets can be gamed for profit.

If the price of gas goes up, you try to buy less gas. If the price of houses drops, you are more likely to buy a house. If the Euro is down, you are more likely to take a vacation to Europe. If one store sells eggs for $8/dozen and another store sells the exact same eggs for $4/dozen, you go to the cheaper store. If you react to prices in every other arena of your life, why wouldn't you react to prices in securities?
Prices of securities aren't like prices of day to day goods. Security prices are more like lottery tickets where the future payoff is unknown. Just because a security had dropped in value doesn't mean it's better value today than it was yesterday.
The fact that your trade in edv paid off is not any kind of proof of sound strategy.
You made a profit on edv because inflation expectations came down. But you didn't have any extra knowledge that they would when you bought it.
You made a bet and it paid off. You can make similar bets in Vegas.
Securities as lottery tickets doesn't change the fact that if the price of lottery tickets goes on sales, those tickets become better deals. The payoff will be what it will be, so if you can snag it at a lower price, that's better.

The fact my profit on edv paid off is evidence that markets aren't efficient. If markets were efficient, security prices wouldn't be so volatile, overshooting targets, and then snapping back violently. They'd more smoothly adjust to their targets. Volatility is evidence of inefficencies. Somewhere in the middle of the volatile range the price lands on its efficient number, but then it's always overshooting that number and swinging to be either too low or too high.

If more people actively traded, there would be less inefficiency. As soon as the price deviates from its efficient level, active traders would immediately correct it back to efficient equilibrium. The fact that it doesn't is evidence that there is massive inefficiency that can be exploited by active trading.
I wish you the best in your active trading endeavors and also thank you. since You will be adding information to the market, I thank you on behalf of the lazy investors like me.
I think active trading is a noble effort.
superstition: belief that market will one day come around to your concept of fair value
rule of law guy
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Re: Do Bogleheads "Buy the Dip"?

Post by rule of law guy »

followtheplan wrote: Tue Feb 06, 2024 7:35 am
rule of law guy wrote: Mon Feb 05, 2024 10:05 am define dip.

we buy a little bit after a 10% drop from a previous high. if it continues to drop, buy more heavily after a 20% dip. after that, play it by ear. we did not have a significant equity portfolio during the GFC, were still paying off college, mortgage etc so I dont know what we would have done then. we have about 70% short term treasuries and 30% equity, mostly SPY. so we are conservative
20%, 30% or more...

I'm also talking in terms of buying an index fund rather than gambling on individual stocks.
there is no right/wrong definition of dip, but it has been my sense that if you dont buy at least a little at -10%, you may be missing some opportunity when measured over the long term,
Never wrong, unless my wife tells me that I am.
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GhostMang
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Re: Do Bogleheads "Buy the Dip"?

Post by GhostMang »

Think this question is more of a Value Investing vs Index Investing. I primarily am an index investor, I stay the course and am buying the market through out the year no matter where it's at. During the big drops I might buy a little more aggressively because who doesn't love a sale, but I do not hold cash on the sidelines for it. In theory I could value invest the index, but that has never made sense to me as we have historical trends for it and dollar cost averaging beats timing the index.

That said I do love to "gamble" doing some value investing though nowhere near the depth or risk of Warren, Charlie, Burry, etc obviously. I have a little pocket of cash in a brokerage I use just for that and when the market takes those dives I start looking for deals based on my own value investing formula. 60% of the time it works every time.
csr
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Re: Do Bogleheads "Buy the Dip"?

Post by csr »

GhostMang wrote: Tue Feb 06, 2024 12:55 pm Think this question is more of a Value Investing vs Index Investing.
Not really, there are plenty of value indexes you can stay fully invested in.
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GhostMang
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Re: Do Bogleheads "Buy the Dip"?

Post by GhostMang »

csr wrote: Tue Feb 06, 2024 1:03 pm
GhostMang wrote: Tue Feb 06, 2024 12:55 pm Think this question is more of a Value Investing vs Index Investing.
Not really, there are plenty of value indexes you can stay fully invested in.
I don't know anything about those, but first one I found was VTV. Would someone buy the dip on that or if they're fully invested stay the course and dollar cost average?
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Re: Do index investors "Buy the Dip"?

Post by Grt2bOutdoors »

livesoft wrote: Sun Feb 04, 2024 5:46 pm
WhitePuma wrote: Sun Feb 04, 2024 5:34 pmI’m confused. You sold BND and bought it the next day. You didn’t know the price would drop. How is this not marketing timing?
I sold BND in order to raise cash to buy AVUV. I did not expect BND to drop 1%. I had no expectation of what BND was going to do.

Then since BND dropped 1% the next day (a big drop for a bond fund), I was compelled by my IPS to buy BND, So I looked in my portfolio for how to raise cash to buy BND. Conveniently VTI was up more than 1% at the same time that BND was down more than 1%, so I sold some VTI to get the cash to buy BND.

If you want to call it market timing, then that's perfectly OK with me. But don't forget that with bona fide Market Timing on bogleheads.org one is supposed to lose money. Since I made money I could not have possibly been doing Market Timing.

BTW, I may sell that BND if it goes up by 1% tomorrow. :twisted: And I may sell AVUV if it goes up by 3% tomorrow.
All these trades - I hope this isn't in a taxable account where you have to file returns, you'll have alot of disallowed wash sales, buying and selling before the 30 day window expires.
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Re: Do index investors "Buy the Dip"?

Post by livesoft »

Grt2bOutdoors wrote: Sat Feb 10, 2024 9:15 pmAll these trades - I hope this isn't in a taxable account where you have to file returns, you'll have alot of disallowed wash sales, buying and selling before the 30 day window expires.
No wash sale if you sell for gains. :twisted:

But this isn't a taxable account anyways.
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csr
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Re: Do index investors "Buy the Dip"?

Post by csr »

Grt2bOutdoors wrote: Sat Feb 10, 2024 9:15 pm All these trades - I hope this isn't in a taxable account where you have to file returns, you'll have alot of disallowed wash sales, buying and selling before the 30 day window expires.
That's what day traders do intraday all day every day in a taxable account.
Boglehead1967
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Re: Do Bogleheads "Buy the Dip"?

Post by Boglehead1967 »

The answer is yes, but not by holding cash to wait for a dip.
In February 2020 I rebalanced after walking away from FA and reinvesting all of IRA funds into 100% VTSAX.
After that I had lump sums to invest in 2021,22 and 23. For lump sums I just invest into ETFs with limit orders.
But I never invest the money I would need for any day to day things, not worth it for me.
With all of the above we only spend 30% of what comes in so maybe not a good example.
Grt2bOutdoors
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Re: Do index investors "Buy the Dip"?

Post by Grt2bOutdoors »

csr wrote: Sun Feb 11, 2024 12:20 pm
Grt2bOutdoors wrote: Sat Feb 10, 2024 9:15 pm All these trades - I hope this isn't in a taxable account where you have to file returns, you'll have alot of disallowed wash sales, buying and selling before the 30 day window expires.
That's what day traders do intraday all day every day in a taxable account.
Traders are making a special tax election most likely, unlike an individual.
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hcs77135
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Re: Do Bogleheads "Buy the Dip"?

Post by hcs77135 »

With retirement contributions, I typically front-load if I can and put as much in as I can early in the year. So that’s not buying the dip. When rebalancing, I do watch the market to try to sell stocks when the market is up and buy bonds when they are low - as opposed to rebalancing on a fixed date or schedule. At end of last July, I inherited a good chunk of money, put it all in a money market fund, and then bought stocks over a 2-1/2 month period, buying dips between August and mid-October. My goal was to have it all invested by then. I admit it was partly market timing and based on a bet that September and early October would be good times to buy. The other part was that it was more money than I felt comfortable investing in a lump sum, and dollar cost averaging over a long period of time felt like too much time out of the market. I was lucky - it could have gone differently, but I made out much better than lump sum on August 1 or DCA.
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LilyFleur
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Re: Do Bogleheads "Buy the Dip"?

Post by LilyFleur »

I have 1% of my portfolio in an individual stock. When I purchased it, I bought it while sleeping with a stop-limit order.

It was fun!

And I saved a few bucks.

I've also bought index funds with stop-limit orders.

I guess I was buying a "mini-dip" that way.

I'm retired now and 72% in the market.

Cash/T-bills are for my 401k withdrawals that are used for living expenses. I don't want to withdraw from equities when the market is down.

I'm not buying new equities now. I simply let the market do what it does, and lazily reallocate as I feel the need.
nyejos11
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Re: Do Bogleheads "Buy the Dip"?

Post by nyejos11 »

Its called rebalancing. If you don't call it rebalancing you are a market timer and that is bad. lol
DSBH
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Re: Do Bogleheads "Buy the Dip"?

Post by DSBH »

followtheplan wrote: Sat Feb 03, 2024 8:00 am With that said, do any of you keep a cash reserve to take advantage of times like these?
I keep cash reserve for living expense contingencies, not for timing the market.
If the market were to be down a large percentage* and you had the funds available, and God willing, the years (decades) to wait for a recovery do you have this worked into your investment plan?
I "buy the dip" by rebalancing (and/or Roth converting), i.e. selling bonds to buy stocks when the stock market drops significantly to get back to my preferred AA of 60/40. As I rebalance, I also increase my AA by 5% (e.g. to 65/35 or 70/30) for each 10%-15% drop from the stock market previous year end high, and do not rebalance on the way up until the stock market reaches its previous year end high - basically taking more risk to get back my paper losses faster as stock market comes back.
John C. Bogle: "Never confuse genius with luck and a bull market".
Caleb4387
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Re: Do Bogleheads "Buy the Dip"?

Post by Caleb4387 »

I believe in buying consistently as everyone else on here, but if ive got 20k in EF and the market dips 30%or more you bet id use at least half to all of that to buy an extra chunk, knowing how quickly we can replenish the EF, I may even work a 2nd job for some time to facilitate extra contributions.
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