Over the last ten years, stocks have marched higher. But the climb hasn’t been a straight line. In fact, there have been plenty of dips. However, thanks to the growing economy, tax reform and overall better corporate earnings, stocks have managed to rebound from those troughs and move to even higher highs. “Buying the failed dip” has become the battle cry for many portfolios and has served investors well.
The problem is, buying the dip may not be a winning strategy anymore.
With economic conditions starting to dwindle and earnings and guidance beginning to become cautious, stocks may not be moving much higher after their recent dips. Blindly buying may not work in investors’ favor, and data backs up this fact. For investors, buying the dip may not work broadly. Nonetheless, using recent downturns to load up on quality dividend stocks could be a winning move.
All in all, don’t buy the failed dip, unless it’s dividend stocks.
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