Practical Money: My strategy to take advantage of market dips
Supercharge your investments when the market is going down
Introduction
One question I always get is: “When is the best time to invest?”
My answer is always, “Yesterday, but today is the next best time.” The age-old saying of “time in the market” beats timing the market always holds true. Nobody consistently knows when the market is about to go up or down. That’s why Dollar-Cost Averaging remains probably the best investment strategy for almost everyone.
I explained Dollar-Cost Averaging a couple of years ago, which you can read here. I’ll go over Dollar-Cost Averaging again in this newsletter, and also reveal a personal strategy that layers something a little spicier on top.
A quick reminder, because the lawyers told me to: this is not financial advice. I am not a fiduciary, a CPA, or even particularly good at assembling IKEA furniture. This is just me sharing my strategies, investments, stocks, index fund strategies, what I'm buying, and where I plan to take those investments. Everyone’s financial goals are different—some of you want a yacht, others just want to stop looking at your 401(k) statements. No financial decisions should be made solely on this newsletter, which is for informational and entertainment purposes only and is not a substitute for advice from a qualified professional who actually knows your situation and charges by the hour.
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What Is Dollar-Cost Averaging?
Dollar-Cost Averaging (DCA) is about investing the same amount on a regular schedule regardless of what the market is doing. Whether stocks are hitting all-time highs, falling apart, or making financial news anchors dramatically point at red arrows... you keep buying. Up 3%? You buy. Down 3%? You still buy, same amount, no hesitation, no vibes-based decision-making.
Instead of trying to predict the perfect entry point, you simply let time do the heavy lifting. It’s incredibly boring. Which is exactly why it works.
The math behind why this works is almost embarrassingly simple: a fixed dollar amount buys more shares when prices are low and fewer shares when prices are high, which smooths out your average cost per share over time. You’re not trying to time anything. You’re just... showing up. Repeatedly. Like a very boring, very effective gym routine.
For instance, I discussed in my “How To Make Your Kids Rich” issue that we give our daughters $100 each month, and on the 15th of every month, they invest $50 of it into the Fidelity S&P 500 index fund (FXAIX). Every month, regardless of whether the market is up or down, they make that investment. In 4 years, my oldest daughter - who is 17 - has made a 43% gain. My youngest daughter - who is 15 - is up over 26% in 2 years.
Personally, I have an automatic weekly investment that goes into VOO (an S&P 500 ETF), QQQ (a Nasdaq 100 ETF) as well as a variety of high-income ETFs like JEPQ, SPYI, IDVO, PFFA, etc.
If this is the strategy behind your 401(k) contributions, congratulations, you’ve been dollar-cost averaging this whole time.
However, standard DCA treats a +2% green day and a -3% red day exactly the same. But market pullbacks are essentially broad-market assets going on sale.
What if you could supercharge standard DCA without turning into a stressful, full-time day trader or trying to time market bottoms?
My Simple “Buy The Dip” Formula
You always hear people say, “buy the dip.” But it can be easy to get in your own head and get spooked investing on a day when the market seems to be falling off a cliff. Here’s a simple strategy I recently mentioned on Twitter that I’ve been following for decades that helps keep it automated. I automate my normal investing, but keep extra cash for market tantrums.
On red days:
If the S&P 500 falls more than 1% in a day, I buy additional shares of VOO.
If the Nasdaq falls more than 2% in a day, I buy additional shares of QQQ (I also buy TQQQ, but let’s ignore that to keep it simple).
Of course, during times like the tariff crash last year, there can be a LOT of red days, and you can start running out of extra cash. You can also alter this strategy to be weekly or monthly.
If I were to invest on red weeks instead of days, I would:
Buy additional VOO on Friday if the S&P 500 falls more than 2% in a week.
Buy additional QQQM if the Nasdaq falls more than 3% in a week.
Why the different thresholds? Because the Nasdaq is simply a more excitable index. It’s more concentrated in growth and tech names, which means it swings harder in both directions than the broader S&P 500. Treating a 1% Nasdaq wobble the same as a 1% S&P wobble would have me buying extra QQQ practically every other week, which defeats the purpose of the rule being special.
To be clear about what this rule is and isn’t: it is not market timing. I’m not predicting bottoms, reading candlestick charts, or consulting a Magic 8-Ball. I’m still doing my regular scheduled contributions no matter what. This is just an extra, optional top-up that triggers on bad days — a way to lean slightly further into the “buy low” half of “buy low, sell high” instead of just shrugging and doing nothing when the market has a rough afternoon.
I use a similar strategy for stocks that I feel took a hit despite good earnings (for example, I just bought more Apple last Friday, and more Google the week before when both of those stocks took a 7% hit despite what I considered good earnings), but that’s obviously a lot more risky when you’re dealing with individual stocks. But I’ll cover that in a future newsletter.
💡 Practical Money Trivia
Looking at the S&P 500's ten worst single-day drops on record, the index was up by double digits a year later in all but one case — and still positive three and five years out, every time.
Buying an S&P 500 index fund when there’s a big dip has been undefeated.
A Real World Example
I was able to run a simulation using daily S&P closing data from mid-2021 through June 16, 2026 (which is when I started writing this newsletter… I’ve been slow on getting this one out), so 5 years.
If you were to only use my strategy above for the S&P 500 (this is not including dollar-cost averaging):
There were 162 trading days where the S&P 500 fell more than 1% in a session
$16,200 total invested ($100 × 162 buys) in VOO
Final value: about $26,264 — a gain of roughly $10,064, or +62%
Note that this is price appreciation only, and doesn’t take into account the dividend-adjusted VOO price. The real-world VOO would actually be a little higher than this once you count ~4-5 years of reinvested dividends.
Also Read
Conclusion
Dollar-Cost Averaging is one of the few investing strategies that gets easier the longer you stick with it. Adding simple rules to buy a little extra during bigger market declines helps me stay excited when everyone else is panicking.
When the market falls, I don’t think, “How much money did I lose today?”
I think, “Looks like the market is on sale.”
That mindset shift has probably been more valuable than any stock tip I’ve ever received.
That's it for this week! As always, no financial decisions should be made solely on this newsletter, which is for informational and entertainment purposes only and is not intended to be a substitute for advice from a professional financial advisor or qualified expert. If you haven’t already, please subscribe to this newsletter below and never miss an update: