Should You Buy the Dip?
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- Опубликовано: 18 окт 2022
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When the stock market goes down, you might hear people encouraging you to "buy the dip". But what does that mean, and is it a good idea?
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I am enjoying Philip’s transition from fiscally responsible dad to fiscally responsible dad who listened to 90s Red Hot Chili Peppers
Trashy tattoos look good on him
Early 90’s rhcp was the end of an era
I liked the Flanders moustache better :/
And the whole time looking as if he drives a white van with no windows.
Sold my APPL before it tanked, will buy at next major drop. I’d definitely need to make use of the $250k liquidity elsewhere. So what should I be looking at? Large cap or small cap stocks? Maybe crypto?
It’s going to be a wild year for these sectors, so you should def. invest in crypto. 60% of my portfolio is spread across tech stocks, crypto and Crypto/Gold ETF
Yes, my asset manager advised I spread further into mutual funds and crypto Etf and boy am I glad I did. The whole idea is: Don’t get too greedy and also to exit at the right time, so generally I do find having an adviser very helpful.
could you recommend some good advisers? don’t get me wrong, I already have an asset manager for my $5m portfolio, but he seems not to know much about crypto.
Colleen Rose Mccaffery’’ is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment
Cheers buddy. Smart and great looking lady. Hopefully will my time. I left messages, was told to expect feedback. Thank you.
Buying the dip also has an expensive hidden cost. All the time and stress spent in trying to time exactly when to buy and sell can wreck your health.
I hadn't thought of that point. Dollar cost averaging it is!
You're also not being paid for the time you spent researching the markets.
What health?zz
Buying the dip only works cryptocurrency
I felt that since i devised system for buying the dip which requires constant monitoring
Time in the market > Timing the market. Trying to pinpoint the lowest exact point is nearly impossible so most people just dollar cost average. Referring to your 2x vs 1.5x vs 1.1x example. Most people can probably score a 1.4-1.6x with it so that's the most stable choice.
Did not expect my why no one plays boy to be watching a video on stocks as well lol.
I tried "day trading" and buying dips. I hate the highs and lows of gambling and realized it wasn't for me. Seeing the prices go up and down gave me mild stress. Then thinking about the cost of inflation from waiting for the dip, paying taxes on the gains, and the time it takes to pay attention to the trends wasn't worth it. I think the key to doing this is asking yourself if you're enjoying it or if it stresses you out. I have friends that LOVE watching the market. I personally, would rather spend my time doing other things. I took some of my savings and put it into I-bonds instead.
Could you guys do a video on surviving inflation?
The most successful day traders are ultimately just riding the ripples created by the institutional investors.
You don't want to be in a position where the best outcome is contingent on you anticipating the movement of the bigger players and beating them to the punch, and the worst outcome being finding yourself at the opposite side of their trade and getting washed out
They can lose continuously and live to fight another day, most day traders dont have that luxury
Day trading is gambling. Just buy actual stocks
@@farahmo4519 it's not a gambling google it and you will see
I have a cousin that would swing thousands of dollars a day, but I'm like you. I don't have the heart for it. I like my dividends, whether the market is up or down, I keep getting money every month and reinvest. I'm not planning on ever selling them anyway, and want to eventually pass them off to my kids (fingers crossed I have any).
Even though everything is down 20%, and the numbers seem bad, I keep plugging away.
@@YassineYassine-eo2vi Day trading can very much be gambling. You are getting hungry up on semantics.
The only dip I took advantage of was Covid. I cobbled together $5,000 and gave my broker a list of "buy at" prices that he said would never happen. I now own just a little bit of Disney and Coke, but a couple others never got that low.
2:55: This point forth, this is an excellent illsutration of the chief problem with waiting to "buy the dip" of even a "sure thing" (such as the broad market) - that is, the waiting part, and all the loss that can (and, commonly does) come along therewith.
On top of the already great advice in the video, also remember:
1. Only use what you don't foresee needing within 10 years.
2. The more patience you have, the better.
3. Always DYOR [Do your own research] on investments
4. Know your risk tolerance.
Also funny, the last part of this youtube id/url spells OOps 🤣
This is great advice, but I would rephrase #1 with only invest with money that you don't expect to need in the next 10 years. Obviously no one would invest if they thought they could lose it all, but you can lose a lot in a short period of time and 10 years is usually the minimum estimate for long term investing where you expect to have made some type of profit assuming you are well diversified.
That doesn't really apply to buying broad market ETFs. There is no reason to assume that the S&P 500 could crash etfs like SPY or VOO to $0.
SPY and VOO can crash to zero it's just extremely unlikely even with the worst case scenarios. And good idea Lances
@@sovashadow You're right. I might add that although they technically could, there is no reason to act as if they might. If someone is that paranoid over VOO and SPY, they probably don't even have any stocks and probably invest solely in something like gold, lol. That's doomsday prepper levels of paranoia
Dollar cost averaging is one of the best ways to grow your investments. You can try and time out the best time to buy (I bought a lot a few weeks ago) but you also need to be able to stomach the value going down further when we're in volatile markets.
Investing in bulk has higher expected return. Dollar cost averaging a bulk sum over a period of time is on average worse. Dollar cost averaging just hedges your "bought at the worst time" volatility risk and you pay this hedge with opportunity cost of staying out of the market for certain period with certain portion of your money. For me, this insurance seems to be quite expensive. Hedging is okay as long as it, in the end, achieves your financial goal.
@@zdenek3010 I dollar cost average into my 401k with my employer, but I do agree. Last year I invested $500 / month into my Roth IRA, however this year I bought on the large red days. $2k here, $1k here, and maxed it out very early on. This was a decent strategy and my Roth IRA is still up by a lot since I’ve had it for years, but I do wish that I held off a bit so I could have bought more since this bear market has lasted almost a year now.
Only works when the market is going up.
@@abramisme Some of my best purchases have been when the market is going down. Mostly November/December 2018, March of 2020, and almost everything in 2022.
@@BrandonMinguez that sound good for back then.now we have to much big money in
Another important factor is the dividend. If you hypothetically waited a year, you are missing 1 year of dividends.
I prefer spinach dip. 😉 The video caught me in a moment of weakness and I just couldn't resist. Love the channel.
Costco sells a Mexican corn dip that I am really digging right now
I have been following you from about 3to 4yrs..
Thank you for all your two cents
Fir bhi... 4 paise ka dimag nai hai
LOL omg 1:23 is also exactly when I understood what she was talking about, too!
P.S. loved you on TFD!
Such a good and concise explanation! I love it!
Gotta love your intro sketches!
The moustache and old haircut needs to come back. I feel like this isn't the same person anymore haha. They have the voice but i'm suspicious about the face
Have always loved your channel... PLEASE never stop creating videos!!!
33 years til retirement.
Shut up and take my money retirement accounts! 🤣
Dollar cost averaging gang all day.
Vouch. I'm 35 so I have a ways to go as well
I love how clearly you explain things! You're an inspiration!
Simply adding rules to your dollar cost averaging is likely the best way to go, adding more when oversold and less when not, in absolute dollar terms.This way you're leveraging time AND momentum.
are you talking about rebalancing to an allocation every time when you reinvest? thats what im doing between 3 etfs. the 3 etfs are 1)growth, 2)value, and 3)mixed
Hey man can you explain it further? I don't understand what do you mean with "oversold". I also think this way (leveraged DCA) is the best, but I don't have figured yet a clear set of rules.
Really like your channel, have watched for years! Bring back the 'stache!!
Only kidding.
I had an idea this morning that I thought might make a good video (series) for Two Cents
Where does my tax money go? Like for real, what account does it hit, what withdrawls are made from that account, and who are its managers. I know you have done a similar video before - I just rewatched it, but I'm not thinking about the breakdown of FICA vs defense vs NASA but rather the landscape of accounts and funds that our tax dollars actually drop into. Thanks for all your work!!
I bought the dip in 2020 and made 64% ROI.
Wow, you guys are like reading my mind! I was just thinking about buying stocks with the prices falling. THANK YOU FOR THIS INFO!! Super helpful.
Awesome video! You actually read my mind on the question I was having since a few months ago
Hooray for Dollar Cost Averaging! Thank you for getting to this point, I really agree with it even though I have nothing against the idea of buying the dip itself.
One thing I would add though is that this video talks about buying individual stocks, which I personally consider risky and not diversified. I propose that you could "buy" the dip, or better yet Dollar Cost Average, against a cheap total market index fund so the question is much easier to understand: is the entire US/World Stock Market as a group (instead of just a single company that is super specific and could fail versus the entire national economy succeeding) going to tank, or is this dip momentary?
I guess that depends on the state of the global economy. In the previous century, the US became the sole world superpower and huge technological advancements gave us exponential growth. And in addition we didn't have to worry about climate change yet. So I guess it's not unusual that the century mostly had a growing trend on stock markets, quickly overcoming all dips. But I'm not sure that we can assume this trend to continue.
Anyway, I'm DCAing VWCE and hoping for the best. But we'll see what happens. Hopefully we're not heading for a permanent dip.
Yes!!! Index investing for the win.
@@Georgije2 Yeah, I hear you. My target equity allocation is 60% US and 40% rest of world so I think I'm like you and am also hoping for things to keep growing globally overall.
Becoming financially literate is the key to being financially successful! So thankful for this channel!
Is it better dca monthly or daily?
Haven’t seen you in a while. Missed you guys
*You two are gem* ❤️
The corny jokes got me 🤣
Love these two smarty pants... Educating and entertaining... Love your videos guys
Definitely one of your best starting bits! Well done
Off topic, loving and living for the ink you two are sporting…and the continued amazing money education shared on this platform. ❤
I thought the tattoos look really tacky and won't age well.
Tattoos are a symptom of trouble in their lives. They stopped publishing videos after the guy lost his moustache and they got those ghetto tattoos.
Excellent summary that is easy to understand.
Glad to see this channel back to posting good videos 👍
645k subs? I remember when this channel only had 4k lol. Very educational and kinda uplifting video!
I miss new videos from 2 cents. Wishing you will post more frequently. Love from India.
Yup! The the efficient market hypothesis at work. Great episode.
It's simple: get in early and and DCA up!
This is one excellent presentation! Louder please so that people in the back (clout-chasers) can hear you more. Great work, keep them coming!
Thanks! Love you guys
Was waiting for this
Austin loves tattoos, thanks for the tips y'all
"Buy the dip" can be framed slightly differently, too, a way to encourage people to keep putting money into the market and not take it out or stop investing entirely. DCA works only if you buy the dip.
As for myself, I came into a modest inheritance (about 2.5 times my annual gross pay) this year. I am living off of that while maxing out my retirement savings opportunities at work. And while it's a little sad to see the balances in those accounts being flat or even down slightly, I just tell myself that I'm buying the dip, and when I finally tap those accounts 10+ years from now, future me will thank past me for BTD instead of putting that money into something like a Tesla.
i love ur videos so much and thank you for doing them
0:25 Ayo family man now, he needs his stock of dad jokes.
Looking forward to the new project!
So good! Thanks!
Thank you for your dedication and passion.
Well done PBS! DCA for the win. Simple consistent buying works wonders to combat volatility and keep people on track with constant investing. I DCA into 401(k), IRA & my after tax brokerage with every bi-weekly paycheck. I highly recommend DCA to all who are intersected in investing, the more boring your strategy the better IMO.
IN HINDSIGHT, YES
thanks for explaining this. This is what I've been doing with stocks for 10 years and I can confirm that this is the easiest way to invest in the market. DCA guys.
Thanks again for this
That wilhelm scream 😂
That intro was gold XD
I was expecting you to talk about when the entire market dips. I wish I had bought more in March 2020 when everything ‘dipped’ due to Covid. I did invest some money at that time and it paid off.
"Nothing looks easier in Hindsight than stock trading." I love that! I always tell friends never to say in convo about trading, "if only I had" or "I should have". I say yah if I had a crystal ball I would be a billionaire.
Hey guys, thanks for giving stone perspective account buying the dip. Also, I hadn't seen your tattoos before. They look so pretty. 😍
You explained this so well and helped to relieve a lot of investing-related anxiety! If only I could give it more than one "like" ! 😄
Thanks for watching you are welcome to my channel🤝... right me directly to this number I have wonderful and profitable thing to introduce to you💯
I forgot to like the video and liked it after seeing your comment. You did liked 2 times in a way 😄
Can you make a video about pet insurance
Haven’t watched this channel in a while and Philip has a sleeve now 😱😂
Offtopic - You Guys Have Amazing Personality :)
I haven't even finished watching, but I laughed at that intro.
Dollar cost averaging is good advice, but if you invest in an indidual retirement account like a Roth IRA, it's better to contribute as much money that you can reasonably afford to invest ASAP rather than spreading out the contributions equally over the year. More time in the market will likely have better results then spreading out the contributions if you could have afforded to invest more money earlier. That said, don't invest any money that you expect to need in the short term (< 10 years).
That's not the scenario they're referencing here. Very few people are investing a lump sum of cash that's already on hand. Most of us, including myself, are taking a percentage of every paycheck as it comes and investing it.
Come for the financial advice, stay for the dad jokes.
Does dollar-cost averaging work when every transaction incurs fees?
Did the mustasche get margin called? 😂
Problem with "Dollar cost averaging" is that it's a strategy that doesn't explain when you should sell and in what quantity. The principle behind it, that you should divide up your investment (as oppose to buying all at once and selling all at once) and invest at different times, is pretty sound. Do you wait 7-10 years down the line and sell your entire position all at once? And how do you know if, at that time, the price is "right"?
@4:22 What about a scheme where you save your paycheck and, instead of buying at regular intervals, only buy when you hear certain bad news and observe drops in stock price (e.g., black swan events with likelihood that the company will recover in time; if a company is fundamentally flawed/dying (e.g., blockbuster/gamestop, with the rise of Netflix and digital streaming media) avoid buying/exit position)? Keep tabs of how much stocks you've purchased/share price each time you buy and never sell the same amount of stocks for less. You still get the benefit of diversification (i.e., investing over time) but you optimize by avoiding buying stocks when it's high for no reason, just because "it's the time of the month where you buy stocks" (not a good reason to buy stocks, IMO).
For example, you see stocks XYZ at $100/sh. In the past 1-7 years, it was previously $200-300. What caused the dip is a black swan event: pandemic's disruption to supply chain, and you expect it to have long term value (going back to $200-300). In the interim, buy every time there is bad (but not deal-breaking news: bad earnings, rainy day, poor performance -- temporary, transitory stuff). If you buy 50 shares at $100, never sell 50 shares for less than $100. Maybe at the next dip (say XYZ rises to $150 but then falls to $120 after a bad quarter), you buy 30 for $120. Now, of the 80 shares of XYZ you now own, 50 may be sold at anytime for no less than $100 and 30 may be sold for no less than $120.
You can hold it long term since it should regress to its 1-7 year average, which is greater than what you currently are buying it for, but there's also no consequence for selling it in the short term if you stick by the rule of selling some number of shares for no less than how much you purchased them for (as long as you're ok with short terms capital gains tax).
Ofc, the trick is to not only observe when prices are trading lower than usual, but to also understand the business. You make money when business experience temporary setbacks, investors sell out of fear (i.e., irrationally), and the business rebounds.
Yes because I am always buying
This is such a great video.
It's not about timing the market, but time in the market.
5:10 .. unless you're in Congress...
This is actually good ide
Time in the market beats timing the market ;)
you dont know how much I love you
Staying in the market beats timing the market. The only reason I'm not buying more stocks now is because I'm in the process of buying a house, maybe. But I'm still consistently investing in my 401k and Roth IRA regardless of how high or low the stocks go.
I have a question about dollar cost averaging. Say at the end of every month you have $1200 to invest. There are many ways to do this. You could:
1. Buy $1200 worth of stock the instant you receive your salary
2. Buy $40 worth of stock every day until the next salary
3. Buy $8 worth of stock every hour of the trading day every day until the next salary
Which of these approaches is the best?
1
Common saying is: Time in the market > Timing the market.
I think they're talking about investing part of your salary over time regardless of the price. If you get a lump sum, it should be invested all at once.
@@Aki-ll3jg You got the wrong idea. DCA is literally the opposite of timing the market. You simply invest at regular intervals. I'm just asking what the optimal interval is. I think you get different results if you DCA monthly than if you DCA daily. Never mind. I'll just pull the data and test it on python myself.
@@feynstein1004 Whichever has the lowest total transaction cost of the 3.
@@ikhbjhbkm5 There are no transaction fees for stocktrading these days. So it's not really a factor.
@@feynstein1004 Then it won't make any difference if your time horizon if sufficiently long, say 10 years+.
you remind me of the 1950s-70s couples :)
Phillip
Damn
I
Love
Finance
I like Onion Dip to go with my "Blue Chips", make sure to pick up some!!!!
There is not video of Gen Alpha from Two Cents?
I buy whenever I have money in my account and need to balance out my stocks to keep a "core" investing status. Also buy non-US stocks and bonds to have a well-rounded account.
1.One of my favorite shows
2. What happened to Phillips? Who's is this new host
Letting retail investors in the pool with professional sharks is ...
Sometimes the dip gets deeper and you have to wait a while. I know.
Great intro! Commenting for the algorithm
You buy the dip but the dip keeps dippin'. So buy some more (dip).
I also agree that it is hard to time the market and that it is better to stay in it. However, theese days there are so many negative and chaotic events/factors around the world that creates a very high uncertainty. Many believe we will enter a recession, some think correction, others a crash. It's a lot of fear going on, but haven't seemed to properly kick in yet. With that for me, plus a loan, higher living cost etc etc, right now i choose to exclusively invest in paying down my loan. It's the safest bet and can't go wrong as long as I have a job aswell.
We are in a recession, it will get worse and more noticeable over the next 12-18 months. Not confident yet if it will improve or worsen after that.
@@SilverHawk214 Yeah, but here in Norway where I live, it has just shown the tendencies so far and have not really started the hard turn down yet. The stuff I have a little invested in, just to keep tabs on the shit I like; is going in minus, but not very much. Some of it even dips into green(plus) now and then. So yeah what Im saying is I both agree and disagree, we are in the very beginning of something that looks like recession. At least here at my place. Perhaps we are just slower to fall in line/realize the reality.
The best way to buy the dip is to see the dip, think "Maybe I should increase my 401k contributions since prices are down.", and do it!
“Time in market will always beat TIMING the market”
Timely video, buying panic (via the S&P 500) is the way to long term wealth.
Time in market >>> timing the market.
I like a good queso, but sometimes harissa hits the spot. Ohhh.... thaaaat dip.... trying to time the stock market bad
TIME IN the market beats TIMING the market.
I'd add to buy a little extra when it is going lower.
I always presumed, "buying the dip" was just putting extra money that you normally wouldn't have. Have your regular 401k contributions and then add some more money when the market starts pulling back and don't regret it if it pulls back a bit more.
It's been fun to watch these two's tattoo journey over the last couple years.
4:16 that's not dollar cost averaging. The individual is buying each time they get paid. immediately putting their money to work. Dollar cost averaging, for example:, would be taking one big pile of cash, you have now, and buying in with 12 equal monthly payments .
Thanks for watching you are welcome to my channel🤝... right me directly to this number I have wonderful and profitable thing to introduce to you💯
You mentioned to me yesterday don’t forget to buy the dip 😂😂😂
What is the ideal frequency for dollar cost averaging? Monthly investments, bi-weekly, weekly?
It really doesn't matter as long as it's not too often where you are paying high commissions to purchase frequently. These are all essentially the same, "Monthly investments, bi-weekly, weekly", and won't noticeably effect long term performance, minimize your trading expenses.