American Investors Are Struggling to Buy the Dip With Trump-Related Anxiety Rattling The Markets

When President Trump took office, it wasn’t clear whether he would have a positive or negative impact on the broad economy and stock market. But the events of the past week have been telling.

Recession fears and concerns about a blown-out tariff war between the U.S. and its trade partners have caused a massive stock market shakeup. The tech-heavy Nasdaq officially slid into correction territory this week, dropping more than 10% off of recent highs.

When stocks take a dive, it’s common for investors to capitalize on that opportunity by scooping up shares at discounted prices. It’s called buying the dip, and it’s a strategy that’s long helped everyday investors grow wealth.

But this Reddit thread highlights a very different trend this time around. It talks about how investors are wary of buying the dip as anxiety around the long-term repercussions of Trump’s economic policies looms.

So should you buy the dip? Let’s dig in.

Why buying the dip often pays off

Investors are often warned not to time the market, but rather, to invest in quality stocks consistently and hold them for years to benefit from share price gains. Buying the dip is an inherent form of market timing. But that doesn’t necessarily make it a bad strategy.

When you buy the dip, there’s always the possibility that stock prices could go lower. And that may be the fear that’s stopping investors from pouncing today.

But your goal as an investor should not necessarily be to buy stocks at their lowest price period. Rather, your goal should be to buy them at a time when they’re likely to increase in value.

Let’s flip things around. It’s not a good idea to buy stocks that are overvalued. But when stock prices fall temporarily due to market conditions, as opposed to inherent problems with the businesses behind them, it’s often a sign that things will eventually improve and values will rise at some point.

Will that happen quickly in this situation? That’s anyone’s guess. And it’s also very possible that the worst of things is yet to come.

But if you’re not sure whether to take advantage of the market events of the past week, you shouldn’t ask yourself, “Am I getting the lowest price?” Instead, ask “Is this stock likely to go up in time?” If it’s a yes, there’s your answer.

Consult a financial advisor for help

In a situation like the one that’s transpired over the past week, it can be all too easy for investors to panic and dump stocks out of fear. That’s quite possibly the worst thing you could do at a time like this.

So rather than give into that fear, stick to your plan. Leave your portfolio untapped unless you have specific outliers you’re looking to unload. Buy the dip if you’re so inclined, or don’t. But don’t overreact.

It’s also a good idea to talk to your financial advisor if you’re worried about your portfolio or the impact of current economic policies. And if you don’t have a financial advisor, get one. Even if you know a thing or two about picking stocks, it never hurts to have your hand held during a period like the one we’re currently experiencing.

The post American Investors Are Struggling to Buy the Dip With Trump-Related Anxiety Rattling The Markets appeared first on 24/7 Wall St..