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Keep Buying During the Stock Market Dip

Updated on February 8, 2019
George Talbot profile image

George Talbot is a writer and investor who graduated from the University of Michigan with degrees in political science and economics.


The back end of this week saw another wave of selling in American markets that may lead some investors to restart the nervous hand wringing that they experienced near the end of 2018.

While a wall of selling is enough to convince anyone to part ways with even their most productive assets, now is not the time to give up on the market. In fact, the end-of-week dip should actually encourage you to invest more. There are some clear reasons why.

Deal with China

Much of the reason why the market has been struggling as of late is because President Donald Trump has yet to sign a trade deal with Chinese President Xi Jingping.

The fear related to a lack of deal has only been made worse because it is now clear that the two won't meet until after the deadline comes and goes. While the lack of a deal, and the somewhat volatile relationship shared between by Trump and Xi could be a real cause for concern, reading the tea leaves and understanding what is going on American both economically and politically can help shine light on what is likely to happen in the coming months.

Capital Management's Michael Kramer broke down what is likely to happen in the near future between the United States and China.

In the end, Trump is going to make sure a deal gets done thanks to the looming 2020 election. "He also doesn’t want the stock market to go down, that is his Job approval rating," Kramer explained.

Because a deal will likely get done sooner or later, the market is sure to experience a bounce back at that time as well.

Sell the Rip Buy the Dip

In 2018, as a strong market began to slow and confidence began to the wane, Bank of American strategist wrote that the correct strategy was to "sell the rip." Basically, sell when markets are still strong, but are likely to get weaker.

Now, as the market continues to slow, the correct strategy according to that adviser is to "buy the dip." Basically, take advantage of lower costs and build your portfolio with strong properties that you can get at a bargain now, and enjoy the income of later when the market returns to full strength.

It's times like these that having the guts to make a predictive move can really pay off.


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