buy the potential debt-limit dip

 


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Should you buy the potential debt-limit dip?

“There’s been a lot of reward for when people step in and buy the dip,” Cox said. Many investors are still kicking themselves over not buying more stocks at their lows during the height of the pandemic, she added.

But you can’t look at the market in a vacuum.

“We have so many other pressures weighing on the economy,” she said. The US economy has spent the past year defying recession forecasts, but its luck could run out later this year, according to a new survey of business economists. Many big-box retailers’ earnings reports indicated that consumers are cutting back on non-essential purchases, a possible sign of a looming recession.

Speaker of the House Kevin McCarthy along with Senate and House Republicans speak to the press outside the Capitol Building on Wednesday, May 17, in Washington, DC.'Time is critical': Debt limit deal remains out of reach as McCarthy and Biden plan to meet again“You don’t want to get over-invested with a recession on the horizon,” Reynolds said. In his view, it’s only worth taking advantage of a market sale if the S&P 500 dips below 16% of its current value.

If you’re a short-term investor it’s better to err on the side of caution, Cox said. But as a long-term investor if you see stock prices drop below 5% of their current value “it may make sense to buy into that.”

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