How many here will buy more in a 50% draw down?

A 50% drop is very unusual. Probably only once every generation or two. So historically it would be a great time to buy. I'd buy at that point. Without looking at a chart, I suspect the last time that happened was in the GFC. And the time before? Maybe 1987 black Monday crash? Maybe not.

Of course, in the modern era, too much information is available, so it appears that there's always enough people who "buy the dip", and when you "buy the dip", you usually buy too early, but if enough people do it, then we never reach the "natural" low, so it's possible that because too many people will buy at -20% and at -30% and certainly at -40%, that you will never see the -50%. And isn't that the general conundrum of "getting out" when you think the price is too high. The big problem is that you have to make TWO decisions at that point, when to get out, and then again when to get back in. And so many people wait and wait to get back in (maybe they are waiting for that -50% that never comes), and then they sit out the next big leg up.

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.