Buying the dips

lozzy1965

One reasonable tip that is fairly easy to enact for individual shares, is to watch a few that you wish to buy, for a period of time.  Often they will go up and down a bit, sometimes they will take off, sometimes they will plummet.  If the fundamentals of the company haven't changed, and you would have invested in them anyway, then buying 'on a dip' means that you are getting them cheaper than you would otherwise hove done.  That is about the best you can hope for I think.  Of course you may miss out if they have taken off while you were watching, and they may carry on falling after you have bought, but that's why it's not easy to make above average returns on the stock market!  I do love that word "fundamentals" too.  Like it is some precise measure of a company's worth

bostonerimus

Infrastructure said:

I frequently hear that an investment strategy for buying shares or cryptocurrency is to “buy the dips”.  How does this actually work?

I can see that if you have some money to invest, then you might hold on until the price of your targeted investment falls in price, then you fill your boots.

But that is just buying in one dip. How do people buy more than one? Surely they have spent all their money buying the first dip? Or are people spending only some of their money the first time, and holding some cash back to buy at a later date?  That doesn’t seem to make much sense to me.

Or, are people are accumulating sufficient money between dips to make worthwhile purchases on a regular basis? Where would this money come from?

 

You are describing market timing which is best avoided if you are investing over the long term. If people are accumulating cash between dips then they will have missed a lot of gains because you have to factor in reinvested dividends/interest as well as price. I would forget about market timing and just invest regularly, preferably automatically from every paycheck. You will probably be doing that anyway if you have a DC pension.

davidexmachina

If this really works, there will be plenty of quant modelled algo strategies on play that are buying dips far faster, more accurately, and at a far greater scale than you could easily imagine!

Thrugelmir

Infrastructure said:

What is strange though is that I never hear of people selling assets for a profit, 

Not only do people sell when they've made a profit. Also when they've made a loss. Every asset has a fair price. Sometimes the price of an asset gets ahead of itself, and better opportunities are found elsewhere. Sometimes an investment case doesn't pan out and one just needs to cut ones losses and move on. Selling at a profit doesn't necessarily mean cashing in an entire stake either. Just top slicing away to diversify the portfolio further. 

No asset propels ever upwards indefinitely. 

deejaybee

I had a punt on crypto with typical bad timing, not long before Elon crashed the market ...

The various coins i have that are still under water,i will hold ( hodl) onto

I did buy POLYGON during the dip @ 82p, and it carried on lower, but started going back up, and i sold it all @ £1.05.... it did then go up to £1.60 ish <doh> but at least i had taken a decent profit.

I "only" put 800 in ( that i am prepared to lose the lot )  and when i last looked i was only about 50 down, which, given whats been happening, and my inexperience, isnt too bad in my opinion.

Its VERY volatile, and learning usually costs money, i know that.

Albermarle

deejaybee said:

I had a punt on crypto with typical bad timing, not long before Elon crashed the market ...

The various coins i have that are still under water,i will hold ( hodl) onto

I did buy POLYGON during the dip @ 82p, and it carried on lower, but started going back up, and i sold it all @ £1.05.... it did then go up to £1.60 ish <doh> but at least i had taken a decent profit.

I "only" put 800 in ( that i am prepared to lose the lot )  and when i last looked i was only about 50 down, which, given whats been happening, and my inexperience, isnt too bad in my opinion.

Its VERY volatile, and learning usually costs money, i know that.

Maybe it would be more fun to gamble on horseraces or football scores , rather than crypto ?

deejaybee

Been there and done that haha (  i actually did gamble for a living for over 2 years  -( 20 years ago now )

Fruit machines ( when they could be beaten ) and online casino blackjack ( bagging the signup bonuses,when the wagering requirements were  a lot lower )  It was an interesting time, proper living on the edge, but came out the other side ok.

I think i'm gonna stick to crypto, as that will satisfy my gambling instinct,without looking at dodgy horses ( although i did do well @ the cheltenham festival this year )

I did buy a few K's worth of VLS100 for a SIPP, so i am sensible sometimes ;-)