In the wake of recent stock market declines amid escalating tensions in the U.S.-Iran conflict, some investors are contemplating the strategy known as “buying the dip,” where assets are purchased at temporarily lower prices in hopes of profiting when the market recovers. However, financial advisors caution that while this strategy can be appealing, it is fraught with risks.
“Buying the dip” gained popularity among retail investors during significant market downturns in 2025, but enthusiasm for the approach has waned since the onset of the Middle East conflict. Joon Um, a certified financial planner and managing owner of Secure Tax and Accounting in Hayward, California, emphasized the challenges associated with timing such investments. He noted, “It sounds great, but timing it is really hard,” adding that predicting market movements is inherently uncertain. Um also pointed out that while the fear of missing investment opportunities—often referred to as FOMO—can be intense, making impulsive decisions based on emotion can lead to unfavorable outcomes. “Missing one dip won’t hurt you, but making an emotional decision might,” he advised.
As of now, the markets show significant declines, with the Dow Jones Industrial Average losing nearly 800 points, landing at 45,166.64, and the S&P 500 dropping 1.67% to a seven-month low of 6,368.85. The Nasdaq Composite fell by 2.15%, closing at 20,948.36. However, some market relief was observed following comments from Federal Reserve Chair Jerome Powell, which seemed to soothe investor fears regarding potential interest rate hikes prompted by rising energy costs. Additionally, former President Donald Trump commented on progress in negotiations with Iran while simultaneously threatening to target the nation’s oil infrastructure if a peace agreement is not forthcoming.
Despite some fluctuations, the S&P 500 has edged closer to correction territory, down approximately 9% from its 52-week intraday peak. Notably, stock futures appeared optimistic the following day after reports indicated Trump’s willingness to resolve the conflict even if the Strait of Hormuz remains largely closed.
Investors may find themselves in two camps during market downturns: those who panic-sell and those who seek to capitalize on discounted assets. For those eyeing longer-term investment goals, like retirement, it can be tempting to quickly allocate funds into the market. However, experts advise that this approach should be integrated into a comprehensive investment plan. Jon Ulin, a certified financial planner and managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida, suggested maintaining a level of “dry powder”—liquid cash ready for investment at predetermined price points. He recommended diversifying investments rather than concentrating on single stocks or particular assets like gold or bitcoin.
Ulin also stressed the importance of discipline in this strategy, stating that purchases should align with long-term financial goals rather than simply reacting to market volatility. Moreover, experts warn that waiting to enter the market at the lowest point carries its own risks. Missing the market’s best-performing days, which often coincide with its worst, can be detrimental. Based on research from JPMorgan Asset Management, Ulin suggested “dollar-cost averaging,” where fixed amounts are invested at regular intervals over a few months, rather than trying to time the market perfectly.
As the market continues to navigate these uncertain waters, investors are encouraged to carefully consider their strategies and adhere to long-term plans rather than succumbing to the emotional impulses that can accompany market fluctuations.
