How and when to buy the dip
Excellent chart of what got killed in 2022 and then what started working in 2023.
This is also the most prescriptive chart of what to buy when you want to "buy the dip"
Every manager that says "hey the market is falling so we're going to buy quality" is so so so wrong. Do the polar opposite, buy the biggest pieces of crap you can, negative cashflow, high growth stuff.
On the market bounce, this is the stuff that will bounce the most.
Source: GS via Gavin Baker (https://twitter.com/GavinSBaker)
Okay so when?
Public markets can be volatile but one needs to look through the noise and climb the wall of worry. Every market wiggle is merely a moment in time but the funny old thing about time is the clock never stops ticking.
Markets can have a poor period for some time, but the thing that always encourages me is the chart below from the JPMorgan Guide to the Markets.
Intra-year declines for the ASX200 are usually greater than -10% yet we finish the calendar year with positive returns most of the time. Volatility exists but a drawdown does not mean it is teh end of the world.
Our real economy continues to do okay, and if it isn't it will at again at some point. There is always demand for "things" and people tend to find work eventually.
Equity investing is (should be?) rooted in long-term thinking, volatility is part of the game. Losses are hard to stomach but asset allocation plays an important part in the long-run.
Well, either asset allocation or your personal capital flows solve the issue of long-run investing as you cost averaging over years helps reduce portfolio volatility too.