Buying the Dips
Instinct says you should sell – but you may be wiser to buy.
There is a silver lining to staying invested during market slumps. As stocks dip, you gain an opportunity to buy more shares of quality companies at less expense. Also, you remain in the market when it rallies, rather than trying to race back in (and buy high) once the bulls regain momentum.
After a market descent, there comes a point of capitulation when investors start buying again. Prior to that moment, you may find some good deals as great stocks go on sale. Large-company stocks have returned an average of 11.1% per year since the conclusion of World War II, even with 13 bear markets and periodic corrections.
Historically, the fourth quarter has been pretty good for stocks. In fact, the average Q4 gain for the S&P 500 has been + 3.64%. We have no assurance that the broad benchmark will post that kind of gain or better in Q4 2015, but the market mindset can easily shift into “rally mode” in fall. So buying the dips may prove wise once again.1
1 - kiplinger.com/article/investing/T052-C008-S002-how-to-survive-a-stock-market-correction.html [8/14]
2 - investorplace.com/2015/09/4-things-prevent-sp-500-reaching/[ 9/22/15]