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Anonymous

13 Mar 2021

Should I be buying the dip since the market for most of my stocks are going down?

Currently owns NIO, QQQ & NNDM and this 3 has been dipping quite a lot. Was thinking if I should take this opportunity to buy the dips?

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    Discussion (4)

    What are your thoughts?

    That depends on your style. I do not have confidence to continue purchasing things that I am unsure about their future.

    I only invest in fundamentally solid companies that are well established and market leaders with wide economic moat. That gives me the confidence that short term sell downs give me the opportunity to add.

    However, if the fundamentals of the companies are weak, high debt, no consistent revenue, income and cash flow growth, many competitors, then I would be worried. Doesn’t mean I wouldn’t trade them.

    I’ve traded a lot of TSLA, ARK ETFs and other more speculative positions that their financial statements doesn’t look strong. But I would set a clear take profit and stop loss target. Ofc I can’t predict the future and if these companies do well over the long run, someone who held on all the way would probably do better than me. But that’s my style, I would hold strong companies I believe in and trade in wherever there is hype or momentum, and get out before I’m hurt

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      thefrugalstudent

      thefrugalstudent

      06 Mar 2021

      Level 14·Founder at thefrugalstudent.com

      Hi Anon,

      As Chris has mentioned, price dips are only a good opportunity if the companies you're invested in haven't fundamentally worsened, and remain to be the same, solid companies that they were when you first invested in them. So, it would be prudent to ensure that this is indeed the case before buying the dip on individual stocks.

      As for QQQ, I'd say there's no harm in buying the dip. Unlike stocks, ETFs like QQQ are self-cleansing, and poor performing stocks in an index will simply get replaced by another if it declines tremendously. In this sense, you can be more sure that QQQ will almost definitely bounce back in value - it's simply a matter of time.

      If you're unsure about buying into the dip for individual stocks, I'd say just go for QQQ and perhaps other ETFs that you've been eyeing. This will help to average down your investment costs.

      Hope this helps & all the best!

      Regards,

      thefrugalstudent

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        Chris

        Chris

        06 Mar 2021

        Level 15·Owner and Writer at Tortoisemoney.com

        I would say it depends on the valuation and how convicted you are about these stocks. Buying the dip...

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