“Buying the Dip” is a Flawed Long-Term Investment Strategy.
Stocks have been on a roll over the past few years. But strong performance also has many investors concerned, especially those with extra cash on the sidelines. With elevated valuations and noisy headlines, I often hear investors say: “At these levels, I’d rather wait for a pullback before investing.”
In stock market parlance, this approach is commonly referred to as “buying the dip.” But recent quantitative research shows that such a strategy is flawed, and it can actually hurt investor returns over time.
To be fair, I understand the appeal of a ‘buying the dip’ approach. By waiting for markets to pull back…
Read the entire article: Why “Buying the Dip” Can Hurt Returns Over Time | Zacks Investment Management Blog