Comments on: Should I Invest Immediately After a Small Dip in the Stock Market?

By: Martin Gajewski Jr.

Martin Gajewski Jr. — Wed, 09 Jan 2008 03:23:08 +0000

If you are looking to invest,i mean invest well, maybe think outside the bubble ?

Brazil is on of the Brick countries, actually second in rankings now, and the real estate, energy and foreign trade sectors are just swelling.

Do your homework:
http://groups.google.com/group/investinbrazil

I learned a whole lot from this group and managed to earn 40%-60% annually in the real estate sector which is red hot right now.
earn 35-50% annually on real estate, 50%-150% in foreign trade and the energy sector 100% – ???? who knows depends on yourself and amounts of money invested i guess……

Besides a great excuse to actually visit Brazil and what could be better than a business trip?

Whoever said cant mix business and pleasure was definitely wrong.

Good Luck !

By: Zook

Zook — Fri, 09 Nov 2007 21:18:56 +0000

rstlne-

It’s not waiting around for dips [al least that's what I meant], but if one presents itself in the middle of buying stocks, than you should jump on it…

I plan on buying more Google next Tuesday. I mean I just bought a share at $730 this past week. Now I might buy in 1-2 with Google at $665 as it is now a buying opportunity IMHO.

By: rstlne

rstlne — Fri, 09 Nov 2007 20:17:18 +0000

I don’t usually wait for dips. My strategy is more along the lines of deciding what to invest in rather than when to invest. That said, I do take advantage of corrections by temporarily lowering my cash position.

By: Zook

Zook — Fri, 09 Nov 2007 17:19:52 +0000

If I had $5000 and wanted to buy QQQQ and wanted to buy it 5-times, I think when certain situations arise like the one we are dealing with right now, things change and so should your strategy. If you bought $1000 at $54.50 last week and this week saw it at $50.50, should you just but your $1000 or should you double or triple it? I am in the camp that as things change, so should you. Doesn’t mean you buy $4000 today, but maybe you buy $3000 using my example.

It isn’t timing the market like we think [or at least I do] when I hear the term. You are dollar coast averaging and then a huge sale comes around and you change it up.

By: Tim

Tim — Fri, 09 Nov 2007 17:15:42 +0000

sure, why not? if you are dollar cost averaging, you should be able to smooth out your long term horizon. If you dollar cost average when the market does dip, then all the better. Of course, the market could further dip and before it starts to increase again. Stick with good stocks that you researched. There is a lot of short selling going on now on a lot of unknowns, because there are lots of greedy bastards out there. Good, solid companies with good fundamentals who are taking a hit because the larger market is taking a hit, will still do well, so buy them.

Second, diversify your portfolio.

By: Friday Finance Findings for November 9th : Generation X Finance

Friday Finance Findings for November 9th : Generation X Finance — Fri, 09 Nov 2007 14:57:17 +0000

[...] Should I Invest Immediately After a Dip in the Stock Market? – If you’re investing for the long haul, buying stocks on sale is a great thing to do. Even so, if you already have an automatic investing plan in place, it might not be worth the headaches of trying to time your purchases and just stick with the plan. [...]

By: DanMorin

DanMorin — Fri, 09 Nov 2007 10:55:28 +0000

The U.S stock market has been inflated for many years with cheap money. An adjustment is necessary and liquidation (recession) must take place to return to P/E ratios according to customers (investors) preferences, including babyboomers wanting to retire (sell their investments). This time, lowering the interest rate will not make the stock market go higher; it will simply inflate the money supply again, and reduce the purchasing power of the dollar. The U.S. dollar already lost over 35% of its value this year alone, so you better have a good performing stock to offset that loss. Plus, you will be taxed on your artifical capital gain.

The stock market has still a long way down to adjust. If you wish to understand more about business cycle, visit http://www.mises.org/.

By: Rick

Rick — Thu, 08 Nov 2007 21:14:30 +0000

I’ve been dabbling with doing this a bit. I opened a Zecco account with some “play money”, and I try to buy on dips, and buy stocks I think will do well. So far, I’ve found it’s hit and miss. I feel like I’m learning a lot, so I’m not ready to give up active trading. It’s kinda fun, but it does take some time. If you don’t have time to spend researching stocks and the market, I’d suggest you just do regular investments (weekly, monthly) in an index fund. I do that as well with my retirement accounts. But if you have some time to spend researching the market, it certainly is pretty fun to try to time to market.

By: dountoothers

dountoothers — Thu, 08 Nov 2007 20:48:23 +0000

How about a hybrid theory? Move money to your investment account on a regular basis (weekly, monthly, whatever) but only actually invest 98% of it.

When the market corrects, throw in what you have saved up from the other 2%.

Good point sandycheeks, Zecco does something simular. It’s called a money market fund sweep or something like that.

By: Johanna

Johanna — Thu, 08 Nov 2007 12:34:10 +0000

@sandycheeks: If you keep your “cash money” in a Vanguard money market fund, you can transfer money from there into your other Vanguard funds, and it arrives the same day. (At least, I think it does – it’s been a while since I’ve done this.)

By: S. B.

S. B. — Thu, 08 Nov 2007 12:22:30 +0000

“There has never been a thirty year period where stocks are down…”

Yes, but also keep in mind that 30-year periods have historically been much better than simply not being down. By one study (that contained data starting before 1929 to present), the worst 30-year period returned about 8% annually! That is pretty amazing to think about.

Of course, for shorter time periods, the record is much, much different.

By: dountoothers

dountoothers — Thu, 08 Nov 2007 11:53:22 +0000

Zecco offers $0 stock trades (10 per month, 4.50 after that) with a min 2500 account balance. So no, you don’t have to pay much if you wanted to try some market timing of your own.

By: Rob in Madrid

Rob in Madrid — Thu, 08 Nov 2007 08:14:57 +0000

Congratulations Trent I just saw you broke the 20,000 reader barrier. Do you think you could add a feature as getrichslowly has done and allow “edible” comments

By: infix

infix — Thu, 08 Nov 2007 04:06:57 +0000

At this point I’m kind of afraid to do either: dollar cost average or buy on dips. Problem is there are some real systemic problems in the US financial system right now. The credit markets have begun to seize up again and a couple $Trillion in homeowner equity will be lost over the next 3 or 4 years. The US$ is at historic lows. It really seems the mountain of debt the the US economy has been based on for the last few years is now starting to fall over.

I was planning on starting a Roth IRA with Vanguard before the end of the year, but at this point, I don’t know of any safe places to park money.

BTW: for more on all this read:
http://calculatedrisk.blogspot.com/

It’s written by retired mortgage banking folks. I started reading it a year ago and they were talking about the subprime mortgage problem way before it ever showed up in the mainstream media.

By: MoneyNing

MoneyNing — Wed, 07 Nov 2007 23:35:33 +0000

Buying on the dip is often very hard to do. So for most people, regular, automatic investments is the way to go!

By: sandycheeks

sandycheeks — Wed, 07 Nov 2007 22:32:45 +0000

Meh, when I put in a buy order directly @ Vanguard, it usually takes 3 days so I never know what the market will be doing. You’d have to be using a broker (who charges a fee) to attempt market-time, right?

By: Money Blue Book

Money Blue Book — Wed, 07 Nov 2007 22:18:32 +0000

I think it’s always a temptation to try to time the market, but the market can be quite random in the short run.

The best long term strategy is just to invest regularly so that you can average-down every time the market dips.
-R

By: Dave

Dave — Wed, 07 Nov 2007 22:00:46 +0000

@Frank:
I agree. If you keep waiting for a serious correction to make an investment, you could miss many months of gains, and wind up worse than if you had just invested.
That said, I’m buying financials now, because they’re quite the bargain. I’m also not particularly concerned if they go down tomorrow, or next week, or next month, because I’m not going to sell for decades.

By: Writers Coin

Writers Coin — Wed, 07 Nov 2007 21:42:33 +0000

Wow, nice timing!

By: Frank

Frank — Wed, 07 Nov 2007 21:23:34 +0000

If I already had a regular plan of investing (dollar-cost-averaging) AND there was an exceptionally bad day in the market AND I had some cash hanging around with no other purchase, I think it would be a wise time to buy. Trying to ONLY buy on down days would never work.

Also, I don’t have a link to the statistic handy, but I believe that you can’t find a 10 year period in the market that doesn’t have a positive return- I could be wrong but I’ve had that in my head for a while. :)