Saturday, October 24, 2009
Buy on the dips
One investing strategy that is coming back in vogue is the concept of "buying on the dips". This is where one would purchase stocks or add to your existing positions whenever the market makes small corrections. While some bears have predicted corrections of 10-15% in the recent months, which have never happened, smaller 1-3% drops happen on a regular basis. This is normal stock market activity. The "buying on the dips" strategy takes advantage of this situation. Since the March '09 lows, the stock market has now advanced over 60%. That's a lot. A much faster recovery than expected. Use your cash positions to buy good stocks that pullback on down days and you will be rewarded over time. Did you miss out on the monster Amazon day? Wait for a correction and buy it later. Use more strategy and less emotion in your buying and selling decisions and you will sleep much better at night.