‘The dip is your friend’: Why some advisers are telling young investors to buy stocks despite stagflation fears rattling markets

How low can stocks go? The question has investors nervous as they worry about one bottom after another.

Answer: Choose a number.some analysts say Prepare for further declinesother expect a rebound.

Wall Street is nervous about the prospect of stagflation — the double-edged sword of long-term inflation and high unemployment — as the Federal Reserve tries to fight inflation by raising interest rates without tipping the economy into recession.

Anh Tran, managing partner of Orange, Calif.-based SageMint Wealth, has some advice for young investors who have time before retirement: “Now is the time to take advantage of market volatility and keep investing.”

Her “Own Your Money Before It Has You” speech on CNBC Thursday’s event.

Why? Gen Z and millennial investors have around 25 to 30 years to recover from another bottom.

“Buying the dip is your best friend, so buy the dip, take advantage of the fact that prices are low right now, and don’t try to time the market,” added podcast host Paula Pant.afford anything,” is also at the event.

“Now is the time when we should take advantage of market volatility and keep investing.”

— Anh Tran, SageMint Wealth

Buying the dip or “BTD” isn’t always as easy or as smart as Jon Burckett-St. Laurent, Senior Portfolio Manager Exencial Wealth Advisorwrote MarketWatch in April.

With the CPI hovering at a 40-year high – reaching 8.3% in April – he said central banks may be less eager to intervene through so-called “quantitative easing” to cut interest rates sharply or buy bonds to keep extra money flowing , especially in the context of a marked slowdown in economic growth.

“The next problem with BTD is that a realistic strategy requires more detail than ‘buy when the price falls,'” he wrote. “Some questions to consider: What is a dip? What money do we buy? When do we sell?”

Instead, Burkett-St. Laurent recommends doing what he calls a “tactical rebalancing” of, say, 80% stocks and 20% bonds, returning to 60% stocks and 40% bonds once the market recovers and the fundamentals look safer.

He also suggested waiting for blood in the streets. “A 50% drop in the stock market could constitute an emotionally driven overreaction,” he added, adding that a 3%, 5% or even 10% drop isn’t exactly a “generational buying opportunity.”

‘Some questions to consider: What is a dip? What money do we use to buy it? When are we selling?

— Jon Burkett-St. Laurent, Senior Portfolio Manager at Exencial Wealth Advisors

Still, 43 percent of investors aged 18 to 25 said they were ready to increase their investments, according to a recent survey by personal finance site Bankrate. More than a quarter (27%) are millennials between the ages of 26 and 41.

But only 14% of investors are between the ages of 41 and 57, the so-called Gen X demographics. Only 8% of baby boomers aged 58 to 76 said they are likely to invest more in the market this year. About 22% said they would invest less.

Even those younger investors may now be less confident about buying the dip.The new survey was conducted a month ago — before Wednesday’s stock market rout Anxiety in the face of inflation.

Dow Jones Industrial Average DJIA,
S&P 500 Index,
and Nasdaq Composite COMP,
Friday’s close was mixedafter briefly holding onto positive territory earlier in the day, moved into bear market territory late Friday.

The Dow and S&P 500 closed Thursday at Lowest level since March 2021. The Dow Jones Industrial Average fell for an eighth straight week, its longest losing streak since April 1932, according to Dow Jones Market Data.

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