Should You Buy the Dip?
Bloomberg Businessweek|March 09, 2020
It’s a good instinct not to get carried away with the emotion of a falling market, but that doesn’t mean you should get aggressive instead
Suzanne Woolley and Liz Capo McCormick
Should You Buy the Dip?

When equity markets fall, there’s always a chorus urging you to take advantage of the opportunity to buy stocks for less than they cost the day before. Everyone loves a bargain, and after 11 years of a bull market, the S&P 500’s 11% plunge during the week of Feb. 24 made for the worst-performing five-day stretch since the financial crisis more than a decade ago. Even Larry Kudlow, head of President Trump’s National Economic Council, said investors should heed the old advice to “think about buying the dip.”

Plenty did, for a moment at least. The S&P 500 rallied 4.6% on March 2. Then it wobbled again, dropping even after an emergency 50-basis-point cut to the Federal Reserve’s benchmark rate, before climbing the next day. It will likely rise and fall dramatically again and again while the markets grapple with the spread of Covid-19 and what it means for the global economy and the risk of a recession. Meanwhile, the bond market keeps flashing signs of economic anxiety: Traders are willing to pay so much for safe-haven bonds that the 10-year Treasury yield slid at one point to a record of below 1%. (Yields fall as bond prices rise.)

This is the trouble with buying the dip: It’s basically a form of market timing, which even professional traders can rarely do well for very long. Many investors planning for a long-term goal such as retirement do themselves no favors by letting market noise creep into their consciousness and narrow their vision. It doesn’t make sense to abandon a well-thought-out asset allocation because one part of a portfolio may suddenly appear cheaper than it was a few months ago.

Diese Geschichte stammt aus der March 09, 2020-Ausgabe von Bloomberg Businessweek.

Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.

Diese Geschichte stammt aus der March 09, 2020-Ausgabe von Bloomberg Businessweek.

Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.

WEITERE ARTIKEL AUS BLOOMBERG BUSINESSWEEKAlle anzeigen
Instagram's Founders Say It's Time for a New Social App
Bloomberg Businessweek US

Instagram's Founders Say It's Time for a New Social App

The rise of AI and the fall of Twitter could create opportunities for upstarts

time-read
4 Minuten  |
March 13, 2023
Running in Circles
Bloomberg Businessweek US

Running in Circles

A subscription running shoe program aims to fight footwear waste

time-read
3 Minuten  |
March 20 - 27, 2023
What I Learned Working at a Hawaiien Mega-Resort
Bloomberg Businessweek US

What I Learned Working at a Hawaiien Mega-Resort

Nine wild secrets from the staff at Turtle Bay, who have to manage everyone from haughty honeymooners to go-go-dancing golfers.

time-read
10 Minuten  |
March 20 - 27, 2023
How Noma Will Blossom In Kyoto
Bloomberg Businessweek US

How Noma Will Blossom In Kyoto

The best restaurant in the world just began its second pop-up in Japan. Here's what's cooking

time-read
3 Minuten  |
March 20 - 27, 2023
The Last-Mover Problem
Bloomberg Businessweek US

The Last-Mover Problem

A startup called Sennder is trying to bring an extremely tech-resistant industry into the age of apps

time-read
10+ Minuten  |
March 20 - 27, 2023
Tick Tock, TikTok
Bloomberg Businessweek US

Tick Tock, TikTok

The US thinks the Chinese-owned social media app is a major national security risk. TikTok is running out of ways to avoid a ban

time-read
10+ Minuten  |
March 20 - 27, 2023
Cleaner Clothing Dye, Made From Bacteria
Bloomberg Businessweek US

Cleaner Clothing Dye, Made From Bacteria

A UK company produces colors with less water than conventional methods and no toxic chemicals

time-read
3 Minuten  |
March 20 - 27, 2023
Pumping Heat in Hamburg
Bloomberg Businessweek US

Pumping Heat in Hamburg

The German port city plans to store hot water underground and bring it up to heat homes in the winter

time-read
3 Minuten  |
March 20 - 27, 2023
Sustainability: Calamari's Climate Edge
Bloomberg Businessweek US

Sustainability: Calamari's Climate Edge

Squid's ability to flourish in warmer waters makes it fitting for a diet for the changing environment

time-read
4 Minuten  |
March 20 - 27, 2023
New Money, New Problems
Bloomberg Businessweek US

New Money, New Problems

In Naples, an influx of wealthy is displacing out-of-towners lower-income workers

time-read
4 Minuten  |
March 20 - 27, 2023