“Buy the dip” is something financial types repeat when the market goes down. What does it mean?
It’s really just a spin on the old standard “Buy low, sell high.” And like most mantras, it’s great advice that’s hard to follow. Sure, I’ll buy low, but when is it low? Is it going to go lower?
So buy the dip, but is this the dip? Is it going to dip lower? When’s the dippiest dip going to happen?
Buy the dip applies to all the dips.
The good news: If you’re not a professional day trader, it probably doesn’t matter. For the average investor in it for the long haul, a dip tends to be a good deal. When the market dips, stocks are cheaper so you can buy more of them. But really, you should always be buying: Dips, peaks, valleys, spikes, and everything else. It’s why Dollar Cost Averaging is a thing, and a thing worth doing.
Historically, the market has generally climbed back to where it was — and beyond. In the long run, you’re likely to come out ahead. Yes, it might take a while, and yes, you may not get the absolute best deal. But it’s still good to buy the dip — because it’s good to invest.
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