Buying the dip…

**‘Buy the Dip’ Believers Tested by Market’s Steep Drops**

**‘Buy the Dip’ Believers Are Tested by Market’s Downward Slide**
**Small investors continue to pour money into stocks despite the grimmest outlook in years for interest rates and a possible recession; ‘When the market zigs, I zag’**
**By Gunjan Banerji and Caitlin McCabe, The Wall Street Journal, May 10, 2022**

**This year’s stock market volatility has turbocharged a favorite strategy among individual investors: buying the dip. The dramatic plunge in major indexes will test their resolve.**

**On Thursday, when the stock market had one of its worst days of the year, individuals rushed in, setting a one-day buying record. In March, they invested the largest ever monthly sum, according to Vanda Research data beginning in 2014, and continued to pour money into the markets in April....Small investors plowed $114 billion into U.S. stock funds through March as the S&P 500 tumbled into a correction, falling at least 10% from its high...**

**Individual investors’ appetite for stocks diverges from the behavior of professional investors, who have collectively sold stocks during the turbulence. JPMorgan Chase & Co. estimates that institutional investors have pulled $199 billion out of the stock market this year, according to an analysis of public order flow data through Friday. Meanwhile, pros keep ramping up bearish bets against major U.S. equity indexes through the futures market...** [end quote]

The pros have been around the block a few times. They’ve seen this story before.

Don’t fight the Fed!

There will be a time to buy the dip. But it won’t be for months, perhaps a year or more.