{"id":10137,"date":"2022-02-04T08:00:58","date_gmt":"2022-02-04T08:00:58","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=10137"},"modified":"2022-02-26T13:05:36","modified_gmt":"2022-02-26T13:05:36","slug":"is-this-a-good-time-to-buy-the-dip","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/is-this-a-good-time-to-buy-the-dip\/","title":{"rendered":"Is This a Good Time to “Buy the Dip”?"},"content":{"rendered":"\n

Timothy M. from Galveston, TX asks: <\/em>Hello Mitch, I\nthink the economy is going to do well in 2022, and I was looking at the stock\nmarket correction as an opportunity to \u201cbuy the dip.\u201d Problem is, I was waiting\nfor the S&P 500 to hit 4,200 before investing, and I\u2019m worried it may be\ntoo late. Do you think there\u2019s still more correction to go, and that I should\nkeep waiting? Or invest now?<\/p>\n\n\n\n

Mitch\u2019s\nResponse:  <\/strong><\/p>\n\n\n\n

Thanks for writing, Timothy. Let me first say I appreciate your\noptimism about U.S. economic growth in the new year, and long-term I think your\ninstincts about buying dips in the stock market will serve you well. <\/p>\n\n\n\n

But I think there are some problems with your approach.<\/p>\n\n\n\n

My first question would be, how did you arrive at 4,200 as\nthe \u2018buy level\u2019 for the S&P 500? Was that based on a percentage from the\npeak or just an arbitrary figure? I understand your goal of trying to buy when\nstocks are in correction mode, but to assign a level for the S&P 500\nassumes that someone could know how deep and how long a correction might last \u2013\nboth impossible feats. Anyone who tells you exactly how far, percentage-wise,\nthe stock market will decline is just guessing.1<\/sup><\/p>\n\n\n\n

Investing During a Market Correction\u2026What Steps Can You Take?<\/a><\/strong><\/p>\n\n\n\n

The current market correction may cause some investors to time the market or think about exiting the market out of fear. The question is \u2013 \u201cWhat can you do when you think<\/em>, \u2018this time may be different<\/em>?\u2019\u201d<\/p>\n\n\n\n

It\u2019s normal for investors to question their next financial\ndecision, but as difficult as it may seem, it\u2019s better to remain calm and avoid\nrash moves. It\u2019s easier said than done, but the actions you take right now have\nthe greatest potential to define your financial future.<\/p>\n\n\n\n

That\u2019s why we have put together a free Black Swan investing\nplaybook with insights and guidance to help you seek success when investing\nthrough these unprecedented times. If you have $500,000 or more to invest, get\nour free investing playbook today.<\/p>\n\n\n\n

Download – <\/a>The Black Swan Investing Playbook<\/a>2<\/a><\/sup><\/em><\/strong><\/p>\n\n\n\n

The second point I\u2019d make here is to remind you, and all\nreaders, that market timing is not a good idea. If you have cash available to\ninvest, and your long-term goals are to generate growth or income or both, then\nwhat will ultimately matter is how much time you spend investing in the market\n\u2013 not how well you time the market. <\/em>In my view, trying to time entry and\nexit points based on short-term market fluctuations will hurt total return over\ntime more than it will help. Investors are far more likely to be wrong more\noften than they are right.<\/p>\n\n\n\n

That all being said, I think your perspective on 2022 being\na good year for economic growth and your belief that this is a stock market\ncorrection, not a bear are both correct. In other words, it is smart to want to\nbuy when you see broad U.S. stocks decline rapidly and sharply, particularly\nwithin a backdrop of strong macroeconomic and corporate earnings fundamentals.\nI just do not think it\u2019s wise to try and get your buying decisions perfect, which\nresults in waiting for a level on the S&P 500 that may never be reached. <\/p>\n\n\n\n

Historical data can help give context to why perfect timing\nin a market correction is not necessary (and as I\u2019ve mentioned, not possible\nover time). Consider that an investor buying the S&P 500 when it is 10% off\nits high \u2013 regardless of whether it is the actual trough of the correction <\/em>\u2013\nwould have netted a median return of +15% over the next year (data since 1950).\nSimply staying invested also captures this upside on the other side of a\ncorrection, with no market timing needed.<\/p>\n\n\n\n

With that\nbeing said, in times like these, it is better to base your decisions on\nresearch, not emotions! Don\u2019t sell and exit the market or wait on the\nsidelines out of fear. <\/p>\n\n\n\n

That\u2019s why we have put together a free Black Swan investing\nplaybook3<\/sup> with insights and guidance to help you seek success when\ninvesting through these unprecedented times. If you have $500,000 or more to\ninvest, get our free investing playbook today. You\u2019ll learn about seven\ntime-tested guidelines to help you seek investing success through this historic\n\u201cBlack Swan\u201d market downturn.<\/p>\n","protected":false},"excerpt":{"rendered":"

Mitch offers his advice about buying stocks during this market correction and the pitfalls of trying to time the market.<\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-10137","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=10137"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10137\/revisions"}],"predecessor-version":[{"id":10208,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10137\/revisions\/10208"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=10137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=10137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=10137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}