Buying the Dip Is a TRAP — The Truth About Surviving the Next Crash

Rashad Bilal (0:00)

Yes, sir. Super saying. Yeah, I got a quick question earlier. And it was like, when I'm dollar cost averaging, at what point should I not do it on the way down? And shout out to Jussie, he had called me and asked me that. I thought it was a good question. I'm like, you know what, I think you have to have a plan. Obviously, when you walk into any trade, you should have a plan. So if you start seeing your equities, and this is talking about shares, if you start to see the shares fall down, is it a good time to buy in? I told them, honestly, I would put percentages, right? If it gets down 30%, that might be a new buy-in for me. Or if it's down 50% from the side, that might be a buy-in. What you don't want to do is average down, and it keeps falling, and it keeps falling, and you're doing it. I've been averaging down for a year now.

Have a different plan approach.

You don't want to spread your capital thin and something keeps falling, and it might not have anything to do with the technicals. It could be something that's happening in the economy itself. It could be interest rates, right? Like they may raise, we'll talk about it later, but just make sure that you have a plan when you're going to dollar cost average, especially on the way down.

Troy Millings (1:04)

All right. Buying a dip is not a strategy.

SPEAKER_3 (1:07)

Thank you.

Troy Millings (1:08)

But dollar cost averaging is a lifestyle. People are confusing it too.

People are trying to buy, people are trying dollar cost average on trades.

SPEAKER_3 (1:19)

Yes.

Troy Millings (1:21)

It was never really recommended to dollar cost average on trades.

SPEAKER_3 (1:24)

Which is called money gambling.

Troy Millings (1:26)

If you're committed to dollar cost averaging, you should always dollar cost average, no matter what happens, if you believe in asset. For instance, Bitcoin, if you believe in Bitcoin and you believe Bitcoin is going to reach a million dollars in 20 years, 10 years, whatever, my personal opinion, buy it every single month, no matter what. No matter what. If it keeps falling for 13 months, keep buying it, because you have strong conviction that it's going to turn the corner, and it always has turned the corner. I think you fall into trouble when you, if you're committed to dollar-cost averaging, and then you stop.

That's not, you have no conviction in what you're doing. It's like Microsoft, like if you really believed in it, and Microsoft had a bad 18 months, but if you really believed in it, you're looking for 10 years. So I think a lot of people, the dollar-cost averaging thing, they're trying to dollar-cost average into trades.

That's a little different from dollar-cost averaging into investments. If you dollar-cost average, you gotta stay with that. You can't stop.

Rashad Bilal (2:35)

And that's for long-term.

SPEAKER_3 (2:37)

Yeah, but when you're doing that, go ahead, Troy.

Rashad Bilal (2:40)

I was gonna say, that's why I think you need to be strategic, right? There's some people who have it done weekly, right?

They'll put a certain amount into their portfolios weekly, some people might do it bi-weekly or monthly, right? And if you're doing $1,000, that's what I think the percentage, it makes it a little bit more strategic, where it's like, okay, hit this metric, I'm buying.

Because it may not, right? Or maybe it will. But if somebody's doing it on a regular, they might say like, hey, I'm running short on capital at this point, and this thing is still going down. Now you're here for the long-term, but even just having a strategic plan about the downside is important.

Troy Millings (3:17)

Well, even it's okay.

Rashad Bilal (3:18)

So that's important.

Troy Millings (3:18)

Budgeting. Budgeting is the most boring aspect of financial literacy, financial empowerment, but it's the most important.

SPEAKER_3 (3:26)

But most important.

Troy Millings (3:27)

It's the foundation of every house. You have to learn how to budget. Dollar-cost averaging should be a bill.

So you should never run out of money.

SPEAKER_3 (3:34)

It should be the first bill that you pay.

Troy Millings (3:36)

You should never run out of money to dollar-cost average because that's money that you already have budgeted in your monthly budget. So it's like the 401k, right? It's like whatever you've chosen, whether it's $100 or whether it's $10,000 if you can afford it, unless you just lose your job, things just fall apart, your business blows up, you should never run out of dollar-cost average money. That's like running out of your cell phone bill money. You never run out of your cell phone bill money, right?