Buying the Dip is for Losers

You’re not a contrarian genius, you just got lucky.

Key Takeaways:

• There’s no real strategy to perfectly timing your investments. You either get lucky or you don’t.

• Waiting to “buy the dip” usually means waiting for something terrible to happen.

• Investing long-term in the market has a better return than buying real estate

In April of last year, I bought the dip. I timed the market perfectly, investing an unexpected cash windfall into the stock market at one of the lowest points in the year. I did not achieve this through brilliant technical analysis or financial forecasting. I achieved this by accident. I slipped on a golden banana peel.

I had just received word from my accountant that my tax bill would be lower than we thought, so I felt confident investing some of the extra cash I had saved up. I had a slower-than-usual workday on Friday, so I instructed my brokerage firm to withdraw the cash from the bank account as soon as possible. By the time the request reached the bank and the cash arrived, it was Tuesday, April 8th, when the S&P 500 was down 11.4% for the year. That’s when I bought, and the very next day, it shot up nine points. In investing, this is called “buying the dip” or correctly identifying a moment in a security’s price where it’s temporarily lower than the average of a certain period (in this case, the year). I just got lucky.

Before we get into the numbers, here’s what we’re looking at: This example uses VOO, the Vanguard ETF that tracks the S&P 500, to show how buying during a temporary dip can affect your total return — even when the total investment is the same. Let’s say you and a friend each invest $10,000 in VOO in 2025. They invest at the start of the year, when prices are still high. You wait — not because you’re timing the market, but because life gets in the way — and your money hits the market on April 8, right after a drop. This table shows how that simple difference in timing affects how many shares you get, and what they’re worth by the end of the year.

How the calculation is done:

• Shares Purchased = $10,000 / Purchase Price

• Value as of 12/31/2025 = Shares Purchased × $628.30 (VOO’s closing price on 2025-12-31)

• Total Return = (Ending Value - $10,000) / $10,000.

Key Takeaways:

• Because I bought on April 8, 2025 (after VOO’s price had dropped) I was able to purchase more shares for the same dollar investment.

• As the price subsequently rebounded, the shares I bought on April 8th ended the year with a much higher total ending value ($13,735) and percent return (37.4%) compared to the January 1 investor.

I have never timed anything that well again. And it’s likely you won’t either.

“Buy the dip” sounds smart. It sounds tactical. But most of the time, what it actually means is:

• You’re holding cash and waiting for the market to go “on sale.”

• You don’t know what that price is, but you’re sure you’ll “feel it” when it happens.

• You’re pretty sure other people are being dumb, and you’ll swoop in and win.

Let’s be clear. Buying the dip can work. There are some winners. But there are always winners and losers at the roulette table. The question is whether your investment strategy works consistently, not whether you got lucky once.

The Dip Feels Like the End of the World

You know when one of the best times in history to invest was? March of 2020.

Did you have a lot of confidence in the state of the world and financial markets in March 2020? Think back to those early pandemic days.

Our co-working space had kicked us out after the mayor ordered everyone to stay home. There was a refrigerated morgue truck parked near my house in Brooklyn to handle the overflow from a nursing home. A perfectly healthy 40-year-old colleague of a friend died from Covid complications. The only sounds we could hear were sirens. It felt like the world might end—or at least change in some irreversible, unknowable way. That was “the dip.”

And it was the “right time” to invest; it was a similar event to what happened to me in April of 2025. But almost no one I knew was pouring cash into the market. Because when the market dips, it’s not just a graph going down. Something is wrong. Something is broken. People will lose their jobs. That’s what makes it a dip in the first place. That’s what makes it feel impossible to buy at that moment.

So if your whole plan is to sit on the sidelines and wait for a crash so you can finally “buy the dip,” just know what you’re really planning for:

• To invest only when things feel terrible.

• To make your boldest financial move at the exact moment your nervous system is screaming: don’t do it.

“Waiting for the Market to Go On Sale” = Timing the Market (Badly)

The phrase “wait for the market to go on sale” gets thrown around like somebody knows something you don’t. It’s really just vague market timing with a consumer mindset. There’s no “sale price” for the S&P 500. The market doesn’t send out a discount code in an email when it’s ready for you to re-enter.

All you’re doing is guessing when the bottom is, and meanwhile, if you’re keeping your money out of the market because you’re waiting for the “sale”, then that whole time you’re missing out on real returns. If you’re holding cash while you wait, you’re not buying the dip. You’re betting against history.

The Market Doesn’t Reward You for Sitting It Out

Here’s what we know:

• The market has historically trended upward over time.

• Most of the gains happen in a few concentrated days during a recovery.

• You have no idea when those days are coming.

If you miss even the 10 best days in a decade, your returns drop dramatically. Miss the 20 best days and your returns get cut in half. And guess when those days usually happen? Right after the worst ones. You don’t get to skip the pain and still cash in on the rebound.

Buying the dip assumes you’ll magically re-enter the market before those big days. But the odds say you won’t.

What to Do Instead

Just put your money in the market. Invest it when it’s available. If your goal is long-term, sustainable wealth, your best shot isn’t timing the highs and lows. It’s participating in the growth — and giving that growth time to compound.

Markets look messy in the short term. But zoom out far enough, and the pattern gets a lot clearer.

Let’s say I had invested $100 in the S&P 500 at the start of 2010 and reinvested all dividends. By the end of 2025, that $100 would’ve grown to about $828. That’s a 728% return over 16 years.

Here’s how that math breaks down:

• Start: $100 invested at the beginning of 2010

• End: $100 × (1 + 728.32/100) = $828.32 at the end of 2025

• Total return = +728%

Here’s a visual:

Oh, by the way, what would have happened if it were $5,000 I had invested, not just $100?

That $5,000 would be worth approximately $41,400 at the end of 2025, assuming all dividends were reinvested and the total gain was 728%. That’s an average of about 15% per year. Just for fun, let’s compare that with the Median Sales Price of a single-family home in the US. You get an average of about 6% growth per year over that same period. Now, are you starting to see why I’m so sick of hearing about all these real estate grifters telling you that buying houses is the best way to build wealth?

Now, of course, past market performance doesn’t guarantee future returns. My aim is to make you more comfortable with investing and actually understand what’s happening.

So what does this mean?

Invest regularly in the stock market. Automatically. Regardless of market conditions.

Just put your money in the market. Investing automatically works because it removes your ego from the process. You don’t need to guess right; you just need to stay in the game long enough for your strategy to play out.

What If I Have Extra Cash?

Then you can ask a better question: Am I holding this cash because I need liquidity or because I’m scared?

If you need the money in the next 1–3 years (like for a home downpayment or education expenses), fine. Keep it accessible. We don’t necessarily have the time horizon to survive a temporary market downturn in 1-3 years, whereas history has shown us that over longer periods, we can easily continue to grow our net worth, as long as we stay invested. This chart shows us 10-year average annual returns have generally ranged from +12.0% to +16.5% in the periods ending 2015–2025.

But if your money is just sitting there because you’re “waiting for the right time,” ask yourself when, exactly, that is. Be specific. What signal are you looking for? And will you actually believe it when it shows up and be able to swallow the bile that bubbles up because something horrible has happened in the world?

If you can’t answer that, you don’t have a plan. You likely have anxiety. That April investment worked because I got lucky. I had extra cash, the market happened to be down, and the trade cleared on the right day. It wasn’t a strategy. It was timing by accident.

That’s the problem with “buying the dip.” It implies control over something you can’t control. It asks you to be right twice: once when you sell, and again when you decide to get back in. When it works, it looks smart in hindsight. But it’s usually just a well-dressed guess. A plan that only works if the market moves how you hope, exactly when you act. This one time.

Real investing doesn’t rely on perfect timing. It relies on time.

Parting Shot: If your whole investment strategy relies on catching the bottom of the market, you don’t have a strategy; you are gambling, not building.