There is something in our human nature that thinks we can buy the dip. That is, sitting with investable cash on the sidelines, waiting to be deployed during the next 20% market correction. This sounds good in theory, but doesn’t work in reality. It’s essentially impossible to do.

Nick Maggiulli at Of Dollars and Data, puts the idea of being able to pull this off successfully, in its rightful place: the grave.

Even God Couldn’t Beat Dollar Cost Averaging

and

Why Buying the Dip is a Terrible Investment Strategy

Essentially, we don’t know when the dips are coming. We don’t know how deep the dips are. We have to be right twice: when to get in and when to get out. We have to know the future.

But even if we did know the future – we still can’t often pull it off. Why? Because as we sit on the sidelines with our cash, waiting to buy the next dip, the market is rising. When we do finally jump in on a dip, the market level of the dip is still often higher than when we first started.

DCA (Dollar Cost Averaging), or more correctly, Periodic Investing, buys in every month, rain or shine, and it allows our investments to grow more steadily than buying dips. It allows us to buy dips automatically. It also provides better returns than waiting for dip buying.

I want my investing returns to be based off of market returns, not guesses, luck, or the ability to tell the future. And I want yours to be based off the same.