3 weeks Bulls don’t buy dips (just guac) Reddit      

We constantly here on CNBC of people being both (1) extremely bullish on the market and (2) buying any dip or weakness in the index.

But that doesn't make sense.

If you're able to buy the dip that means you have investable cash on the sidelines waiting for a pull back. Therefore, you're not extremely bullish (or at least not as bullish as you could be). So bulls don't by the dip.

One thing that might be happening is that when the market drops you change your allocation. Maybe you sell money in bonds and buy the index. But that's not smart bull behavior. Maybe if you do automatic rebalancing but selling some bonds and buying the index when there's a 4.5% pullback is pretty crazy. You'd run out of money in bonds pretty fast.

Another thing that might be happening is that people are taking money not already reserved for investing and buying the dip with that. Maybe you take 20% of your emergency fund and invest it. Here again this is a foolish idea. Set you allocation and invest everything else from the start. Don't adjust in the heat of the moment.

The final thing is that people are loading up on margin during dips. This might be the most foolish. Think of putting on lots of margin and buying a 4.5% dip. You're taking on too much risk and I can't imagine the negative emotions associated with adding margin into what looks like a free-falling drip (like Monday did), even when we know in retrospect it went back up.

In conclusion, bulls don't buy dips in the index. They either invest automatically, or pick individual stocks when they drop. They never buy the dip of the entire index. And they're financially secure so you can buy the dip that matters, namely gauc.

submitted by /u/understand-dont-imag
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