Buying the dip is backfiring for investors looking to take advantage of stock declines

[mahatmakanejeeves]

Yeah, tell me about it.

Buying the dip is backfiring for investors looking to take advantage of stock declines

wsj.com
Buying the Stock-Market Dip Is Backfiring This Year
Investors are profiting less by buying low in 2022.

Link to tweet

[True Blue American]

1. They will in the long run.

I once bought stock, it went down, I bought more. Smartest move I ever made. That is why mutual fund managers buy and sell during down turns. Of course they know more than I do.

[Tomconroy]

2. Dollar average in with every paycheck. It's very hard to predict

The moment the market bottoms.

[mahatmakanejeeves]

3. Oh, I do.

But I still have this uncontrollable belief that I'm smarter than everyone else in the room, and I'll put in a limit order for some stock. That stock is still looking for a bottom.

And good morning.

[Tomconroy]

5. Good morning! I used to think I could pick stocks.

After about 15 years I realized that I couldn't.

[mahatmakanejeeves]

6. About ten percent of the time, it turns out well.

It's that ten percent that keeps me coming back.

It's like shopping at a thrift store. Every once in a while, you'll find a fantastic bargain. That keeps you coming back, even most of the time it's just a bunch of junk you're looking at.

[Tomconroy]

8. The same for me at the horse track but now days I just

pretend to be a horse racing degenerate. I just put the losses in the entertainment budget.

[bottomofthehill]

10. The joy of the TSP

[mitch96]

11. +1. When I was working that's what I did with my 401k. Dips bought more, peaks bought less

It worked out very well for me.
m

[mahatmakanejeeves]

4. In a down year for markets, you might think high-quality stocks would offer a safe haven. [Nope.]

In a down year for markets, you might think high-quality stocks would offer a safe haven. It hasn't happened. Here's why blue-chip stocks are singing the blues this year.

wsj.com
When Bad Things Happen to Good Stocks
Investing in quality stocks seems like a smart move—but the bet on the blue chips hasn’t paid off lately.

Link to tweet

[bucolic_frolic]

7. Few remember 1974, and fewer study it because it is not written about much

1968-74 was a debacle. The Nifty-Fifty crashed. OPEC clobbered energy. Gold took off. Stocks tanked. Blue chips of the day were dirt cheap in April 1974. It was the era of inflation and recession. We're not there yet. There has to be capitulation. Not crash and bounce. Capitulation.

Despite the week we had, there was no conviction. Volume remained moderate. There were just no buyers. So I'm thinking short term a bounce is due.

[progree]

12. I bought stocks on sale back in mid-June after the S&P 500 entered a bear market (more than 20% down

I shifted 14.5% of my investible assets from fixed income to stocks.

I very well knew it could go lower, a lot lower. I very well knew that it may be years to get back to where it was. I may very well have egg on my face for many years. Such is the nature of long-term investing.

But the historic track record of buying equities when they are on sale is stellar.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Compare to the fixed income alternatives.

I also bought a very broad-based mutual fund. (I would never do something like this with an individual stock or a handful of stocks.)

The stock market periodically sets new all-time highs. It has never set a new all time low. It has recovered from every bear market every time and gone on to a new all-time high.

For example, over the past 30 years, ending Friday September 23, the Vanguard S&P 500 index fund (including reinvested dividends) has gone up 15.4 fold, a 9.6%/year annual average return. That's a doubling on average every 7.6 years.

https://finance.yahoo.com/quote/VFINX/history?p=VFINX
The Adjusted Close column includes reinvested distributions