Buying the Dip? 1 Risk to Avoid and 1 Tool to Use

Shares of MercadoLibre (NASDAQ: MELI) are down 43% from their all-time high, as of this writing. That's a big drop for a quality company and investors might be wondering whether they should buy the dip. And this doesn't just apply to MercadoLibre -- many stocks are sharply down from their 52-week highs.

In this video from Motley Fool Backstage Pass recorded on Jan. 6, Fool contributor Jon Quast warns investors of a bias called price anchoring, something to be avoided. Fellow contributor Travis Hoium advocates for an investing method called dollar-cost averaging and talks about why this is a great tool for long-term investors.

Source Fool.com