Buy the dip

Dipbuyers now - Dipsellers later?

Everyday Americans and Wall Street pros alike have long been accustomed to a steady ascent in U.S. stocks. Wading in to buy declines always seemed to pay off, often almost immediately. 

Moments of crises were met with a vigorous response from the U.S. government, ready to unleash stimulus and step in to calm markets. 

By one measure, it has been the worst year for the “buy the dip” strategy in almost a century.

So why might the dynamics be different this time? 

So far, many investors are still piling in. In the five days leading up to Wednesday’s massive rally, investors put an average of $10 billion a day into Vanguard’s S&P 500 fund, around four times the average rate. 

The mentality is a marked change from the years after the financial crisis, when the S&P 500 fell by half from the summer of 2007 to its early 2009 bottom and scarred a generation of investors.

But the market started a long, slow rebound, boosted by a decade of ultralow interest rates. The S&P 500 gained 690% since it bottomed in March 2009 during the global financial crisis. 

Wall Street Journal 10 April 2025

https://www.wsj.com/finance/stocks/market-rout-shatters-long-held-beliefs-on-investing-9474f59b

RE: Shit happens when the Dip-sellers arrive.


Friday’s rout in the S&P 500 Index will test a months-long market trend: investors stepping in to buy the dip.

The bullish bias has persisted despite mounting risks.

The worry is that Donald Trump’s tariff threats against major US trading partners will reignite inflation and hurt earnings. 

That prospect has yet to spark a prolonged slump, with the S&P 500 posting two record highs last week before Friday’s slide.

“Anytime the market shows any pronounced weakness, these pullbacks are getting bought,”  

“I suspect that’s going to happen with this dip.”

Bloomberg 24 February 2025

https://www.bloomberg.com/news/articles/2025-02-24/s-p-500-rout-poses-fresh-test-for-wall-street-s-dip-buying-habit


The trend is your friend. And then the trend is not your friend.

https://englundmacro.blogspot.com/2024/07/1929-202-trend-is-your-friend-and-then.html


Why speculators are still running wild when money is no longer free

https://englundmacro.blogspot.com/2025/02/why-speculators-are-still-running-wild.html






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