Should You Buy Stocks During the Dip?

September 21, 2020
545 Views

While the market is recovering from its recent rout, there’s an opportunity to think about the dips and how to leverage them. With a global pandemic, international trade tensions, and a Presidential Election right around the corner, volatility in stocks is a risk.

The dips often create bargain prices on traditional growth picks. Here are three reasons to consider stocks while they’re down.

1: Tech Stocks Will Remain Relevant for Years to Come

Tech stocks suffered some of the worst slides during the recent dip, but the traditional growth picks (Microsoft, Amazon, Apple, Alphabet, etc.) are already coming back strong.

The largest technology companies have proven that they can grow even during a global pandemic. In fact, it could be argued that the big companies are more important than ever, because they provide the infrastructure and services that allow people to safely work and communicate away from typical office settings.

Tech mega stocks purchased on the dip could provide some security with high growth potential.

2: Corrections Mean Recovery

As we can already see with the recent market rout, the recovery was swift. There have been periods of high volatility and staggering intraday losses in recent years, but the market has always come back. A dip or even a larger correction is almost certain to be followed by a recovery.

Even stocks purchased before the absolute rock-bottom can create returns when the market trend reverses.

3: The Economy is Recovering

Stocks are reliant on a strong economy. Without growth, companies struggle to generate profit. If the economy falters, stocks can stagnate or begin to shrink.

The good news for investors is that the economy is already recovering from its lowest point in 2020. Jobs are returning, unemployment figures are declining, and consumer spending increased last month.

While it could take two to three years for a complete recovery, it’s still reassuring to know that the nation is moving in the right direction. For stocks, this recovery will be a good thing. Investors are likely to be more cautious and this means that future growth patterns could be more consistent with the real value of the best picks.

Buying the stocks that are low today could result in slow but steady growth in 2021.

There are Still Reasons to Engage in Today’s Market

While the rampant bull market may be gone, many stocks are still growing. Even many of the small-cap stocks that have potential. The recent dip and any that come in the future should be seen as opportunities.

As always, research stocks and companies before buying, and consider how any individual pick fits into a wider portfolio,

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