--- title: Is 'Buy the Dip' Dead? Investors Are Avoiding the Popular Strategy This Year description: In recent years, "buy the dip" has been a rewarding strategy for stocks and crypto. Yet fewer investors are buying the dip in 2022. authors: - name: Mallika Mitra role: Contributing Editor url: https://money.com/author/mallika-mitra/ bio: Mallika Mitra is a contributing editor for Money, based in Chicago. She has covered investing and retirement for seven years and her work has appeared in CNBC, Bloomberg, Kiplinger, AARP, Barron’s, Bankrate, The Daily Upside, ETF.com, The Bond Buyer, PLANADVISER, PLANSPONSOR and Investopedia. education: Craig Newmark Graduate School of Journalism at CUNY Kalamazoo College at_money_since: 2020 articles: 395 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - CNBC - Bloomberg - Kiplinger - Barron's - Bankrate - WGN-TV - CBS News Radio - This Morning With Gordon Deal - Everyone's Talkin' Money social: - https://twitter.com/mitra_mallika - https://www.linkedin.com/in/mallika-mitra-4577a386/ editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2022-09-09T15:49:54.000Z' modified: '2024-01-10T17:39:15.000Z' section: Investing tags: - News - stocks word_count: 714 canonical: https://money.com/buy-the-dip-investing-strategy-dead/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Illustration of many dollars riding the stock market dip but possibly getting burned in the process](https://img.money.com/2022/09/News-Buy-the-dip-bad-investing-strategy.jpg?crop=0px%2C149px%2C2880px%2C1620px&quality=85) A super popular investing strategy is having a bad year. "[Buy the dip](https://money.com/buy-the-dip-stock-crypto-strategy/)" has become a go-to move for many investors over the last few years, especially those into trendy investments like [cryptocurrency](https://money.com/what-is-cryptocurrency/) and [meme stocks](https://money.com/investing-tips-latest-meme-stock/). The strategy entails buying an asset like a [stock](https://money.com/how-to-buy-stocks/) or crypto after its price experiences a temporary drop and, in theory, benefiting when the price rises. While the move has recently inspired [memes](https://giphy.com/search/buy-the-dip) and [TikToks](https://www.tiktok.com/discover/buy-the-dip?lang=en), it's not new. The strategy has long attracted attention from investors who aren't necessarily paying attention to the latest [hot stocks](https://money.com/cult-stocks-disney-starbucks-polestar-odd-burger-southwest/) or trends — even those who invest in the market more broadly. But many of the dip-buyers appear to have disappeared this year as the market has performed poorly after big one-day moves, according to analysts at Bespoke Investment Group. "One-day rallies have seen no further upside momentum, while 'buy the dip' after big down days has been replaced with 'sell the dip,'" the Bespoke analysts wrote in a note to clients Thursday. ## How stocks are performing after dips This has been a volatile year for stocks, with the [S&P 500](https://money.com/how-to-invest-in-sp500/) starting 2022 on a high, [entering a bear market in June](https://money.com/investing-moves-bear-market-stocks/), [rallying over the summer](https://money.com/stock-market-will-rally-continue/), then recently [giving up](https://money.com/summer-stock-market-rally-over/) much of those gains. The index — which is commonly used as a benchmark to measure how U.S. stocks are doing overall — has experienced 42 one-day declines of at least 1% and 40 one-day gains of at least 1% this year, according to Bespoke. But for the most part, investors aren't buying the dip after those one-day drops. So far, the index has averaged a further decline of 0.45% on the day after a dip of at least 1% — next-day weakness that it hasn't experienced following big one-day drops since 1987 (which is skewed by a crash in stocks in October of that year), the analysts wrote. From the 1990s up through 2021, the S&P 500 tended to average next day gains after one-day drops of at least 1%, "which fueled the 'buy-the-dip' mentality that reached a fever pitch after the COVID Crash in 2020," they added. In fact, the three years leading up to 2022 averaged some of the strongest gains the day after 1%-or-more drops of the last 70 years, according to the data. "From 2019 to 2021, you could basically set your clock to bounce backs after 1%+ drops," the analysts wrote. "The opposite has been the case this year." They also note that it's not just dip-buyers who aren't making their usual moves this year. Momentum buyers — who buy stocks or other assets when they're on the rise and hope to sell when they peak — have also seemed to disappear. The index has so far averaged a decline of 0.33% on the day after gains of at least 1%. ## Buy the dip vs. buy and hold Buying the dip has been a popular strategy that's paid off for many in the last few years. But that doesn't mean it's necessarily been a smart move. “Just because a stock is cheap is no reason to buy a stock. In fact, it can be one of the worst reasons,” Kimberly Woody, senior portfolio manager at Globalt Investments, [told Money last year](https://money.com/buy-the-dip-stock-crypto-strategy/). “Sometimes things are cheap for a reason.” Plus, timing the market is extremely difficult — even for professionals — and attempting to buy the dip can turn into "catching a falling knife" (buying an asset while its price is dropping). The strategy also requires holding cash on the sidelines while you wait for the dip, meaning you could miss out on the [market's best days](https://money.com/keep-money-in-stock-market-why-important/) if your timing isn't perfect. [Financial advisors](https://money.com/how-to-choose-a-financial-advisor/) tend to recommend instead a buy-and-hold strategy, which will help you build wealth over the long term and doesn't require you to pay attention to short-term market moves. They also suggest employing a strategy like dollar-cost averaging, which entails investing a fixed amount regularly, like $100 each month. Dollar-cost averaging does involve buying the dip sometimes. You just don't have to deal with trying to get the timing exactly right. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/buy-the-dip-investing-strategy-dead/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "Investments", "item": "https://money.com/investments/" }, { "@type": "ListItem", "position": 4, "name": "Is 'Buy the Dip' Dead? 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