Buy the Dip?

2/7/2018 10:03 AM

Dear Friends,

Below is a chart of the Dow Jones Industrial Average (DJIA):

  • Green circle – stochastics dropped to oversold, and bounced right off – good sign

  • Blue circle – yesterday the DJIA dropped below, but held onto the support level of 23,900 – good sign

  • Orange circle – yesterday had massive trading volume on an up day – good sign

What to expect?

  • Probably continued volatility

What to do?

  • Nothing, stay the course, that is a decision

  • Dial down, if you are concerned – call our office

  • Buy the dip, if you think stocks are on sale – which is what I did with my own money yesterday morning, call our office

A comment below on investor psychology

Investor psychology

  • When there is a downturn in the market, investors look at their accounts based on their high-water-mark vs. their current value

  • For example, the S&P 500 index is now:

  • -6% off its 52-week high, but

  • +19% above its 52-week low

  • It is common for investors to think, wow, I lost 6% -- they don’t think, wow, I am up +19%

  • Human nature

Founded in 1992, Jackson Wealth Management is an independent, fee-only investment advisor. Founder George P. Jackson has been the CEO/CIO of the firm since its inception with the goal of delivering value to his clients and his associates. 

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