What 7,000 Days Of Stock Market Data Tells Us About “Buying The Dip”

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  • Опубликовано: 10 июн 2024
  • Should you buy the dip? This is what the data tells us...
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    Shout out to Dylan Locke for his "buying the dip" song - / dylanlocke
    “Buying the dip”. This is a strategy that a lot of investors are very passionate about. Some financial youtubers and investment managers recommend buying the dip as a way to maximize profits in the stock market.
    I wanted to find out if buying the dip is actually an effective investment strategy, or if it is better to follow other buying strategies instead, such as dollar cost averaging. So I decided to spend 6 hours creating multiple hypothetical investing simulations over 7,304 trading days to find out just that. But before we get there, let's back up a little.
    What is buying the dip exactly? It's when you buy into an asset like a stock after it has dropped in price. The belief here is that the new lower price represents a bargain, as the "dip" is only a short-term blip in the market, and with time, the market will bounce back and increase in value.
    You’re essentially trying to time the market. You refrain from investing whilst building your cash reserve, waiting patiently for the stock market to drop. And when the market finally does drop, you invest the lump sum of cash you’ve been saving, to buy stocks at a cheaper price than before. Your goal is to buy stocks at the lowest price possible, in order to maximize the amount of profit you make when the stock market rebounds.
    When you time the stock market dip successfully, it can be great, you can make big big profits. But the debate centers around how often you can actually time the dip correctly, and if it is possible to time the dip consistently over many market cycles, over long periods of time. Because, buying the dip can also go very wrong.
    If you are a stock market investor learning how to invest, and are wondering if you should buy the dip from the recent stock market crash. This stock market for beginners video is for you. Investing for beginners can be tough. Many people miss out on gains from following buy the dip strategy. If you want to make money in the stock market in 2022, you should be dollar cost averaging into index funds. Buying the dip is about as risky as starting a Shopify dropshipping, Amazon dropping, amazon FBA, or whatever online ecommerce business you can think of.
    ______
    DISCLAIMER: Some of the links on this page are affiliate links, meaning, at no additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. Affiliate commissions help fund videos like this one.
    Everything in this video is of my own opinion and could be wrong. I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.

Комментарии • 82

  • @cisium1184
    @cisium1184 Год назад +9

    I buy the dip all the time. It's in the refrigerator section next to the cheese.

  • @lu2616
    @lu2616 Год назад +1

    Thanks for putting in the time & work to these scenarios. I’ve recently wondered if investing only when the bear markets would outperform DCA. Curious if putting half into DCA and another half in reserves for the dip would outperform or give average results.

  • @eleanef
    @eleanef Год назад

    I’m so grateful I found your channel! I should be asleep but I’m just learning so much. Thank you!!

  • @Pouncer_Fox
    @Pouncer_Fox 10 месяцев назад

    Great video. The numbers are really helpful. Even though there are some very catchy characters in the Buy the Dip crowd.

  • @stockswithyon
    @stockswithyon 10 месяцев назад +2

    Very good content. I would have assumed the 10-20% dip buyer would outperform the rest of the group. Thanks for taking the time to put together such useful information.

  • @cloudedjourney
    @cloudedjourney 2 года назад +6

    I try to do dollar cost averaging regularly, but during these big dips I try to find some extra cash to inject in specific stocks and sectors that are dipping. I've been picking up a lot more overtime to add new cash the portfolio on top of regular investments. 200 bucks a day is no small amount of money! good for you!

    • @mikatu
      @mikatu Год назад +2

      That is exactly what buying the dip is, not like she said.

    • @afropunk902
      @afropunk902 Год назад

      This is the best and most reasonable strategy imo

    • @maxrubin9540
      @maxrubin9540 10 месяцев назад

      @@mikatuthere are definitely people who save a cash waiting for a drop.

  • @passportmarc
    @passportmarc 2 года назад

    Great video 😎

  • @Ramakrishna-oc6sz
    @Ramakrishna-oc6sz 2 года назад

    This analysis is excellent

  • @sowmyavarada3966
    @sowmyavarada3966 Год назад +1

    Amazing work putting this info together. This is unbelievably helpful and puts my my mind at ease when considering if I should continue to DCA.

  • @mikatu
    @mikatu Год назад +1

    You missed completelly what "buying the dip" is.
    Buying the dip is just a way to use DCA but taking advantage of the dips to lower the average cost price by buying more in those times.
    Is not like you "explained" to buy a stock only when the market goes down but DCA harder when there is a dip in order to decrease the average price, instead of keeping the standard buy value.

  • @thesheepthemightythecrazy
    @thesheepthemightythecrazy 11 месяцев назад

    Nice video.

  • @GustavoNoronha
    @GustavoNoronha Год назад

    Great video, thanks! I do stock picking, so I end up buying more when my high convictions (which are not the hype stocks, mind) dip, but I otherwise DCA and have small cash reserves.

  • @leonardleung3398
    @leonardleung3398 Год назад +2

    Interesting finding! I do notice one factor overlooked: what if the buy-the-dip people put their money in a high-yield savings account which pays anywhere between 1% to 5%? Would it change everything?

    • @dunerider88
      @dunerider88 5 месяцев назад

      Good thought! Would have to controls for high-yield savings rates at a given time in the market but that certainly would change things.

  • @riverbig4279
    @riverbig4279 2 года назад +4

    You always put in the work. Great video

    • @KarsonGaule
      @KarsonGaule  2 года назад +1

      Thank you!!

    • @perla4118
      @perla4118 2 года назад +1

      I appreciate her work put into this!

  • @samdunn1134
    @samdunn1134 10 месяцев назад

    Ok, so this is very cool. I would be interested in seeing a breakdown of the spreadsheet. The nerdy part of me does wonder if there are any risk adjusted return ratios that favor the intraday strategy.

  • @mushroomcomic897
    @mushroomcomic897 2 года назад +1

    Very good video :)

  • @Ramakrishna-oc6sz
    @Ramakrishna-oc6sz 2 года назад +1

    Can you please make some videos on Japanese and Germany stock's which could become multibaggers

  • @SlotHits777
    @SlotHits777 2 года назад +1

    Good video

  • @KeinNiemand
    @KeinNiemand Год назад

    Buying less to save money to buy the dip might be a bad idea but increasing the rate you DCA at during a dip by maybe saving money elsewhere might still be a good idea. What's important is that you don't panic sell the dip or stop DCAing during a dip.

  • @homeaudiobasics
    @homeaudiobasics Год назад

    What are your thoughts on having a sell point at the top of the dip?
    As an example it's obvious that the dip is happening so you sell while it's in the 5-8% range, wait for it to bottom out and buy the valley so you're not taking 10ish years to recover if you just rode it out?

    • @dunerider88
      @dunerider88 5 месяцев назад

      The risk is you selling right at the bottom of the dip when you thought it was going lower then not capturing the gains.

  • @bonjourincali
    @bonjourincali 2 года назад

    I thank you for your patience and effort on your video. I’m new on stoc market investment. I believe that Dollar Cost Average is more important that buying the dip, because no one knows when is the dip. Thank you

  • @livingunashamed4869
    @livingunashamed4869 2 года назад +2

    Do you lump sum your roth ira or DCA?

  • @js-gc2hk
    @js-gc2hk 2 года назад +1

    That ending, Was that meet Kevin? lol

  • @Ian-of9oi
    @Ian-of9oi 10 месяцев назад

    What about only buying on down days? That’s what I normally do.

  • @foojae
    @foojae 2 года назад +2

    Was always interested in this subject. Thanks for covering and you hard work! 👍

  • @jasonthorogood
    @jasonthorogood 10 месяцев назад

    How about 5% dip?

  • @alexfigueroa277
    @alexfigueroa277 Год назад +1

    $200 everyday? I’m lucky to invest $500 a month.

  • @ernesto7mify
    @ernesto7mify 2 года назад +2

    Great video.. Thanks …👍

    • @KarsonGaule
      @KarsonGaule  2 года назад +1

      Thanks and you’re welcome :)

  • @user-hp9eg3gf6s
    @user-hp9eg3gf6s Год назад

    You can buy the dip with a part of your emergency fund as it is less likly to drop 50% from the point it is now and then replenish the Emergency fund. So the extra safety the dip provides can allow you do invest more money you would potentially need in the near term. But you should not wait to buy the dip with money you do not need in the near future AND if something that truly is bad for companies like ww3 and that's why the market fell then probably do NOT buy the dip with part of your EF (but if intrest rates go up you can buy it as eventualy they will go down or are less likly to go even more up). That's my opinion.

  • @Toffi
    @Toffi Год назад +1

    Very hard to analyze all the data! Good video

  • @klevdavful
    @klevdavful Год назад

    make sure you guys understand 9 minutes and 59 seconds me being a newbie she just debunked my whole entire newbie Foolery strategy damn I'm glad I became a subscriber it really makes sense watching this video better to have your money in the game than to be sitting on the sidelines trying to time win some sector is going to go Belly Up this is why you got to understand the risk and understand diversification don't put all your eggs in one basket and don't do so much research that you forget to invest

  • @dannyg9047
    @dannyg9047 2 года назад +2

    this video is so good!

  • @feliciag6800
    @feliciag6800 2 года назад +2

    Loved it.

  • @uncreativename9936
    @uncreativename9936 Год назад

    I say buying the dip depends on a lot of factors. Personally I don't care much for ranch, but the garlic sauce is worth it in my opinion.

  • @Sylvan_dB
    @Sylvan_dB 2 года назад +4

    I DCA all the time. But every time the market drops 5% to 10%, I invest an additional 1% to 2% into my taxable account. Where do I get the cash? The last several years it has been a margin loan. In 2020, for example, I was investing on dips between march and may and I ended up not quite 10% in margin. I might go deeper, but 20% is about my limit because that way if the market drops 50% then I'll be 40% margin - still a safe level of collateral. It has worked out great.

  • @Mr.clip07
    @Mr.clip07 Год назад

    In any case investing is good just make sure to buy😅

  • @davidfunvideos
    @davidfunvideos 2 года назад

    Buying the dip may can be tightening your belt and put extra cash in during the dips. but keeping up with your regular dollar-cost averaging.

  • @declinjohnson3187
    @declinjohnson3187 8 месяцев назад

    🎉algorithm

  • @OldLion64
    @OldLion64 2 года назад +1

    Nice analysis. The dipsticks are fools. Less chance of picking a dip versus even picking a bottom. Also, the 35 year bull run is over. We are looking at the 1970s scenario again. Anyone who has not looked at that time frame has no clue what is going to happen. If you have less than 10 years before retirement you are screwed. If you have more than 20 then just dollar cost average. In between is a judgement call but probably better to be in then out. I would stay out of individual stocks as well. ETFs and MFs are better for 99% of investors. Picking a winning stock is the equivalent of trying to pick the bottom. No better chance.

  • @silaszebedee9331
    @silaszebedee9331 Год назад

    I am shorting Tesla right now.

  • @rajuathalye9972
    @rajuathalye9972 2 года назад +4

    DCA is best way of investment. Great analysis, amazing clarity 👍👌

  • @wesleyw.terpstra1902
    @wesleyw.terpstra1902 5 месяцев назад

    I realize that this is an old video, but I feel compelled to note that your simulation is deeply flawed: the dip buyer would not just keep his cash in a 0% interest rate account. He'd presumably be using a money market fund for his cash reserve, like VMFXX, from which he can directly execute his purchase of VOO. This greatly reduces the risk of "sitting on the sidelines" and I think completely undermines your thesis (for a more reasonable dip strategy; people waiting for 20% drops are insane).

    • @wesleyw.terpstra1902
      @wesleyw.terpstra1902 5 месяцев назад

      Another major problem with your analysis is in your final commentary about "if you have a strong conviction that the market is going to crash further". Your analysis does NOT refute that strategy, because your simulation _always_ followed a buy-the-dip strategy. If someone only waits for a dip when they expect a dip, even if they are wrong 30% of the time, I suspect that would reverse your results.

  • @Gman-69
    @Gman-69 2 года назад +2

    Great video! Thanks for your time spent putting this one together. I invest 200$ a week

  • @PH-dm8ew
    @PH-dm8ew 2 года назад +2

    No one does these scenarios in isolation. You are dollar cost averaging in and increasing or rebalancing during the dip with non invested cash or bonds.

  • @klevdavful
    @klevdavful Год назад

    wow Carson you got 5600 and beans to just throw at this Beast per month amazing

  • @Mark-cd2wf
    @Mark-cd2wf 2 года назад +2

    If you try to buy the dip, you are the dip.
    Dollar-cost averaging forever!
    Great video, Karson!😁👍

    • @KarsonGaule
      @KarsonGaule  2 года назад +1

      Thanks Mark!

    • @Mark-cd2wf
      @Mark-cd2wf 2 года назад

      @@KarsonGaule (btw, love your name, Hee!)

  • @jmmky
    @jmmky 2 года назад +1

    dca all the way

  • @gillian32
    @gillian32 Год назад

    Here are the results 5:52

  • @engineerahmed7248
    @engineerahmed7248 Год назад

    U discounted the investor would've kept money in savings account & accumulating inflation level profit from there

  • @ygbodybuilder3023
    @ygbodybuilder3023 Год назад +1

    With all this dip buying everyone keeps preaching we all should be extra millionaires in 10 years. I have yet to see one person that purchased alot lot during the last recession and they are now millionaires

    • @kennyfordham6208
      @kennyfordham6208 Год назад

      Indeed. Past performance does not guarantee future performance.
      * cough * FTX * cough *

  • @deficator750
    @deficator750 Год назад

    keep it simple, DCA on red days

  • @mushroomcomic897
    @mushroomcomic897 2 года назад

    Keep them coming are you holding any stocks or what are you watching??

  • @pushupsyourlimits8545
    @pushupsyourlimits8545 2 года назад

    200 bucks every day??? Wow.