Key insights
- The author expresses increased selectivity in 'buying the dip,' citing experiences of averaging down into fundamentally weak companies. They now prioritize clear catalysts and margin of safety before deploying capital. This suggests a potential shift in retail investor sentiment towards more cautious dip-buying strategies, which could reduce support during market pullbacks.
After several market cycles, I stopped automatically buying every 8-12% dip like I used to. Too many times I averaged down into companies with weakening fundamentals just because the price looked cheaper. It ended up tying up capital for months with poor results. Now I only add significant capital when there’s a clear catalyst and reasonable margin of safety. Otherwise, I stay patient and keep dry powder. Have other investors also become more selective with dip-buying this year, or are you still averaging down aggressively?