“Buying On The Dip”

Have you ever heard anyone talk about buying stock on a dip?  This is a common way for investors to earn some additional return by buying when a stock has a lower price and it’s expected to bounce back.  However, the stock’s price has to actually go higher after that dip in order for this to pay off.

Since the market began it’s recent downturn there have certainly been dips that you could buy stock during.  Sometimes this strategy takes a lot longer to pay off than others. Look in the following chart to see some obvious times where you could have bought when stock prices dipped (signified by the $).  Of course no one knows exactly when stocks will bounce back, so we are looking at time in the past where you would have had opportunities.

If you have invested during some of these recent market dips it is understandable that you could be anxious that prices haven’t bounced higher yet.  You do have to be cautious when you buy when the market pulls back because you don’t know how long the market will be lower. A great thought can be to invest only some of your cash during a pull back.  This saves some cash in case even lower prices come and you can invest again at those lower levels.

Remember to stick to your plan!  Continue those habits of saving so that you can be thankful if you see prices move higher.

Wondering how this affects your investments? Schedule a call with Michelle and Steve to discuss your portfolio today.