Is Buying the Dip a Good Investment Strategy for You?
One thing you'll notice the longer you invest is that down periods in the market are inevitable. No bull market lasts forever, just as no bear market does. The better you understand that, the easier it is for you to ignore the short-term price movements in the market and focus on your long-term goals. It's much easier to do this during bull markets when you're seeing your portfolio rising, instead of during bear markets when your portfolio is seemingly dropping by the day.
Another thing you'll notice during these down periods is investors encouraging one another to buy the dip, which essentially means buying stocks after the prices have dropped a significant amount. If you're wondering whether buying the dip is a good investment strategy for you, it's likely the answer is yes.
Buying the dip is a good strategy, but it should only be one part of your larger investment plan, not the whole strategy itself. Your main focus should be long term, but that doesn't mean you can't take advantage of short-term moves to push you closer to your long-term goals. As stock prices are dropping, buying the dip gives you a chance to grab some of your favorite stocks at a discount.
Source Fool.com
