Bought the dip which i thought was the dip but wasn't the real dip. Should i continue averaging down on stocks/etfs that i have conviction in ? Already fired half of my ammo on the initial "dip"

Still trying to recover from my ARKF

Hello!

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I always praise anyone who has started their Investment journey as it's one of the tools to help you achieve financial freedom. Also, because Investing it's not easy.. there are many things you'll need to learn, and you'll have to detach your emotions to stay rational. Buying the dip is a great strategy, but as we all know too well, the dip might not be the lowest dip - it's the harsh reality.

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Personally, the strategy that works for me is long term Investment. When I invest my money, I don't expect to withdraw and touch it for the next 5-10 years. For long term Investment to work, there needs to be a well-structured basket of assets with a mix of Exchange Traded Funds (ETF) and individual growth companies stock that you expect to grow in the next few years.

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To answer your question: Should you buy more stocks/ETF that you have conviction in? It depends on a few factors.

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Factor 1: Enough cash for your daily needs & Emergency fund

Remember to have sufficient cash to meet your daily needs else you risk closing a losing position to satisfy your expenditure needs. (Something you'll regret if the stock price shoot up after certain news or good company results)

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Factor 2: Why is the asset price falling

Understand the reason why the ETF/stock price is falling. For example, China-related stocks are falling despite great financial performances and growth. WHY? It's because of political risk. China can wipe out the entire tuition industry over a weekend. That's why its dangerous and investors and discount the stocks for that risk.

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Factor 3: Threat or Opportunity?

The next question to ask is: Is this a threat? or opportunity? Using China as an example, it could be both depending on your future outlook - remember nobody can predict the future. Hence, there is always a chance either scenario will happen. If you are unsure, it's best to add to other asset to diversify your holdings. If you are very certain it's an opportunity, add positions, but be cautious as the price may drop further. If it's more of a threat, you can cut some of your position to prevent over-concentration.

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All in all, these are just some factors for you to consider, the decision ultimately is in your hands. I wish you all the best, and I hope your portfolio reaches the moon. Cheers! :)

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If it is a good stock, chances is at time you might buy it expensive, but you will never made a wrong purchase

If this strategy does not fit you, ever consider looking for a low cost index fund and get possible more stable but lower returns?