Buy The Dip Vs Dollar Cost Averaging
If you want to know which method will make you richer, open this:
If you want to know which method will make you richer, open this:
Investors on either side of this debate are certain their strategy is the best
So, how can you be sure which one is statistically more likely to grow YOUR money.
I have the answers in this thread
Here is why one always outperforms the other...
So, how can you be sure which one is statistically more likely to grow YOUR money.
I have the answers in this thread
Here is why one always outperforms the other...
The Stock Market is inherently volatile
And the strongest performers of the next 10 years are many times the most volatile stocks in the short term.
In order to benefit from this wealth-building phenomenon, you need to be able to tolerate this volatility
How...
And the strongest performers of the next 10 years are many times the most volatile stocks in the short term.
In order to benefit from this wealth-building phenomenon, you need to be able to tolerate this volatility
How...
DCA and Dip-buying both have their strengths in this respect
But buying the dip is only effective if your market timing is impeccable
Meaning, you're able to buy at the exact lows over a multi-year timeframe
But...
But buying the dip is only effective if your market timing is impeccable
Meaning, you're able to buy at the exact lows over a multi-year timeframe
But...
Since no one (not even pro's) can predict short-term market fluctuations with any degree of accuracy or consistency
It's likely that you'll be left waiting for the 'next dip' whilst the market rallies on
Leaving you behind
It's likely that you'll be left waiting for the 'next dip' whilst the market rallies on
Leaving you behind
Volatility is a cruel mistress
But, more volatility today = higher returns tomorrow
How?
If you have cash in the portfolio or a regular influx of cash-flow
Volatility actually increases your returns over the long term
Because you're able to buy at lower prices over time...
But, more volatility today = higher returns tomorrow
How?
If you have cash in the portfolio or a regular influx of cash-flow
Volatility actually increases your returns over the long term
Because you're able to buy at lower prices over time...
And this makes a massive difference to your portfolio performance.
But let's make this interesting...
We'll assume you have some Godly ability to time the market
And you buy the exact bottoms of the S&P500 between 1970 and 2020
We'll compare this with DCA for the same period
But let's make this interesting...
We'll assume you have some Godly ability to time the market
And you buy the exact bottoms of the S&P500 between 1970 and 2020
We'll compare this with DCA for the same period
Taken from an article by Nick Magully
This graph shows DCA - regularly adding money and buying stocks over time - can be superior to a Buy the Dip strategy that only buys market bottoms.
The data assumes the Buy the Dip investor was able to buy the exact low
DCA still won...
This graph shows DCA - regularly adding money and buying stocks over time - can be superior to a Buy the Dip strategy that only buys market bottoms.
The data assumes the Buy the Dip investor was able to buy the exact low
DCA still won...
In periods when the dips were profound, buying the dip did outperform DCA
BUT remember, this is unrealistic since no one can precisely & consistently time the exact bottom of any market
Anyone who claims they can is a liar.
If they could, they'd be on the Forbes rich list
BUT remember, this is unrealistic since no one can precisely & consistently time the exact bottom of any market
Anyone who claims they can is a liar.
If they could, they'd be on the Forbes rich list
Long-term DCA is superior to buying the dip
So, if you build up cash and buy the next bottom, you'll likely be worse off than if you had bought each month.
Why?
Because while you wait for the next dip, the market will likely keep rising and leave you behind
In conclusion...
So, if you build up cash and buy the next bottom, you'll likely be worse off than if you had bought each month.
Why?
Because while you wait for the next dip, the market will likely keep rising and leave you behind
In conclusion...
The way to achieve superior returns is to:
- Prioritize regular cash flow
- ID businesses you believe will grow over the next 5+ years
- Buy more every week/month if the fundamentals remain intact
Don't have regular cash flow?
Start a side hustle that pays you weekly
- Prioritize regular cash flow
- ID businesses you believe will grow over the next 5+ years
- Buy more every week/month if the fundamentals remain intact
Don't have regular cash flow?
Start a side hustle that pays you weekly
Follow this process, regardless of the short-term volatility in the stock price
And in most cases, assuming your research is accurate, you'll outperform the dip-buyers
And in most cases, assuming your research is accurate, you'll outperform the dip-buyers
Now you know the best strategy for buying stocks
Learn how to find the right stocks to apply this method to
The Stock Picking Strategy shows you how, step-by-step
Get 45% off
Next 25 copies only
Click here 👇
financiallysavvy.gumroad.com
Learn how to find the right stocks to apply this method to
The Stock Picking Strategy shows you how, step-by-step
Get 45% off
Next 25 copies only
Click here 👇
financiallysavvy.gumroad.com
5 gone already
20 left
20 left
18 left
7 left
Loading suggestions...