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  • Buying the dip

    When do you buy the dip ?
    10%, 20% or more ?

    in 2020, I got some , had started at about 25%

  • #2
    21.675%

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    • #3
      I typically buy when I have the cash.

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      • #4
        The question does not make a lot of sense unless it is a brag attempt. There is no magic number (although some stocks do have pretty clear support levels among the individuals and funds who swing and day trade them). It is all about finding stocks that will grow faster than others and overall, though. Think of it as dozens of elevators, and you just want to be on one of the faster upward ones at any given time.

        If there is no good reason for the dip (good stock X is down 4% one day despite market overall up 1%, stock peers up, and no specific damaging news), buy a good chunk right there. If it continues down with no specific logic, nibble on the way down and build a position... use limit orders if you like and the decline lasts awhile. This stuff with sizable drop in one day happens most often on QE announcements and guidance... or for other dumb and random reasons (and it often starts to rebound even by later the same day).

        If there is actually good reason for the dip/drop (major company flaw, strong competitor, politics, unemployment, war, bad economy overall, etc), avoid it altogether and pick lower hanging fruits... or nibble all the way down if you believe in the distressed company and/or it is falling faster than peers. There is no way to know when the rally will come... typically huge rally when hedge funds bite in after days/months of decline. You simply have to keep buying the slide.

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        • #5
          Just want to clarify : there is no brag attempt here . It is just a question .
          Last edited by uksho; 01-20-2022, 08:13 PM. Reason: Not talking about individual stock . I am talking about the whole market

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          • #6
            I dunno but I'm still kicking myself for dumping a large portion of my yearly savings into socks in the first week of this year. And watching it slowly erode since...
            $1 saved = >$1 earned. ✓

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            • #7
              Originally posted by Cubicle View Post
              I dunno but I'm still kicking myself for dumping a large portion of my yearly savings into socks in the first week of this year. And watching it slowly erode since...
              Same here , not only that, I moved from target funds to index funds ( mostly in stocks now ).

              If it has to fall, let it be this year ! As long as it comes back in next 5-10 years . Will buy some at the dip ! That’s why the question .



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              • #8
                When it starts looking like Apple Bottom Jeans

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                • #9
                  Originally posted by Cubicle View Post
                  I dunno but I'm still kicking myself for dumping a large portion of my yearly savings into socks in the first week of this year. And watching it slowly erode since...
                  Me too bruh... WCI and Nysoz keep telling me the how great the stock market is and all im seeing is red.

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                  • #10
                    Folks, the stock market goes up and down. The fact is we have been spoiled during a long bull and the secular trend was up. Right now we have had a month of down and sideways. Think of it as noise and ignore it.

                    To the original question, if you are dollar cost averaging, as you should be, you are buying into the downdraft and getting shares cheap(er) compared to future valuations. Keep doing that.

                    OK, you have money burning a hole in your pocket. When to invest as the market declines? There is no right answer. Some people say every 10% drop. Ok. Others do a technical analysis (e.g., when dividend yield hits 4%). Ok. Others watch the Fed (e.g., when they stop raising interest rates). Ok. Bottom line is no one knows when the market will bottom. For long term money you are better off in the market than trying to time it.

                    I don’t plan a big buy, but I do plan to do my loss harvesting at -20%. Why there? Well, whenever we hit bear market territory by definition I expect to start to see upward pressure. What if we don’t hit bear territory? Well good. My shares will then be on the way back up.

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                    • #11
                      Originally posted by Larry Ragman View Post
                      Folks, the stock market goes up and down. The fact is we have been spoiled during a long bull and the secular trend was up. Right now we have had a month of down and sideways. Think of it as noise and ignore it.

                      To the original question, if you are dollar cost averaging, as you should be, you are buying into the downdraft and getting shares cheap(er) compared to future valuations. Keep doing that.

                      OK, you have money burning a hole in your pocket. When to invest as the market declines? There is no right answer. Some people say every 10% drop. Ok. Others do a technical analysis (e.g., when dividend yield hits 4%). Ok. Others watch the Fed (e.g., when they stop raising interest rates). Ok. Bottom line is no one knows when the market will bottom. For long term money you are better off in the market than trying to time it.

                      I don’t plan a big buy, but I do plan to do my loss harvesting at -20%. Why there? Well, whenever we hit bear market territory by definition I expect to start to see upward pressure. What if we don’t hit bear territory? Well good. My shares will then be on the way back up.
                      Agree!
                      Time in the market beats timing the market.
                      Lump sum usually beats DCA or value averaging.
                      So people suggest you invest when you have cash and forget trying to “buy the dips”.

                      That said, if you have money to invest and the market drops that is a good time to put it in.

                      I keep a little cash in my IRA = dry powder, because it makes me feel good to put some cash in after a drop but it is a small amount (most of my IRA $ is already working)

                      I have a strategic investment policy statement that includes a way to deploy my IRA cash into stocks following drops.
                      IRA dry powder = cash is converted to stocks as follows:
                      10% drop: Invest 25% of cash reserves
                      20% drop: 50% ( could be incremental)
                      30% drop: 75%
                      40% drop: all cash in and turn off news = noise.

                      Another “timing” method (like DCA but you buy more when it drops) is value averaging.
                      VA involves using a value path spreadsheet.

                      A great book i read on about it is in this link:
                      https://www.amazon.com/Value-Averagi...08151769&psc=1
                      Last edited by Tangler; 01-21-2022, 02:00 AM.

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                      • #12
                        Originally posted by Craigslist View Post

                        Me too bruh... WCI and Nysoz keep telling me the how great the stock market is and all im seeing is red.
                        There’s definitely a lot of red out there. It’s going to be one bumpy year due to a variety of reasons. But this is why I like selling options. Stocks can go up down or sideways. But no matter what happens, time always passes so I’m making money from theta decay.

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                        • #13
                          Originally posted by Nysoz View Post

                          There’s definitely a lot of red out there. It’s going to be one bumpy year due to a variety of reasons. But this is why I like selling options. Stocks can go up down or sideways. But no matter what happens, time always passes so I’m making money from theta decay.
                          I do NOT think i am smart enough to do it but it does seem fascinating. Big ERN (was recently on the podcast) does this too. You and he are clearly smart enough to make it work. Very cool. I watch it like i watch a pro sports athlete.

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                          • #14
                            Originally posted by Tangler View Post
                            I do NOT think i am smart enough to do it but it does seem fascinating. Big ERN (was recently on the podcast) does this too. You and he are clearly smart enough to make it work. Very cool. I watch it like i watch a pro sports athlete.
                            The nuances are very complicated for sure but the basics easily learned. It’s just like a different language to get used to, but the idea of it is simple enough. The way I think about it is that options are like lotto tickets. The ones that pay out frequently cost more money and the unlikely ones cost less. Just sell the ones that're unlikely to hit.

                            Although with recent moves in the market, even some of the unlikely ones get hit and part of the game is knowing what to do with it if it does and have the patience to let it happen. So overall I'm down like everyone else, but less down in some ways if that makes sense lol.

                            As for the original question, the easiest thing to do is just keep buying whenever you have money.
                            Last edited by Nysoz; 01-21-2022, 03:11 AM.

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                            • #15
                              Originally posted by Larry Ragman View Post

                              I don’t plan a big buy, but I do plan to do my loss harvesting at -20%. Why there? Well, whenever we hit bear market territory by definition I expect to start to see upward pressure. What if we don’t hit bear territory? Well good. My shares will then be on the way back up.

                              To me, this is the answer to a better question: At what point do you TLH? I like this response.

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