“Buy on the dips” is one of those enduring pillars of stock market wisdom which has served investors well down the decades, and particularly well in recent years, when both the Brexit vote and Donald Trump’s presidential victory provided exceptionally deep dips in which to buy.
Over time, equities have consistently shown themselves to deliver superior real rates of return, especially when compounded by reinvesting income. These returns can be further enhanced by treating market corrections as buying opportunities, hence the expression “buy on the dips”.
Yet the strategy only works in a sustained bull market. In a bear market, the reverse applies – “sell on the rallies” becomes the prevailing…
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