Buy The Dip?
Everything we’ve presented to you about the economy and the markets suggests that investors are rapidly fleeing from stocks. It feels as if a recession might occur very soon, and if that doesn’t happen, we’d be looking at some meager growth at best with all of the rate increases that are projected to occur.
When you look at basic stock market data, things don’t look as grim as they’ve been made out to be. In fact, many individual investors are approaching this current correction as an opportunity to buy the dip, showing homage to Warren Buffett. Last Thursday, when the indices were close to 5 percent down, investors bought in what has become the one day buying record ever since the data has been tracked. More data shows that March saw the largest monthly sum of investments since 2014, with individual investors pouring in a whopping $114 billion. Let’s not forget, the indices are close to 20 percent down while all of this is happening. Market analysts believe that this retail buying is helping prop up the markets, and it feels as if retail investors are smarter than the institutions think. I mean, that’s always been the case, right? Retail investors are shifting to safer stocks or buying low on their risky investments with the belief that markets will rebound, which adds a different layer to a bearish market. This could prove to be a bad idea as it feels like the market doesn’t have a bottom anymore, and it’s all in the hands of whatever economic data we get and how investors interpret it. Most importantly, this shows that the retail power still exists in grand fashion, which will always be a positive for the markets.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
