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Opinion: ‘Buy the dip’ is a horrible stock-market strategy — and these charts prove it


I’ve previously written about why buying the dip can’t beat dollar-cost averaging, even if you were God. However, I feel like that article was a bit too extreme. Buy the Dip was defeated in one fell swoop. It never had a fighting chance. There was no last meal, no departing words, and no funeral procession that followed.

But today, I’m going to change all that. Because today I’m going to give Buy the Dip the proper burial that it deserves and demonstrate without a reasonable doubt why it is a terrible investment strategy.

To start, let’s imagine that you are dropped somewhere in history between 1920 and 2000 and you have to invest in the U.S. stock market

for the next 20 years. You have two investment strategies to choose from:

  1. Dollar-cost averaging (DCA): You invest $100 every month for all 20 years.

  2. Buy the Dip: You save $100 each month in cash until the market dips below…

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