# Investing Amid a Stock Market Correction: My Experience with “Buying the Dip”
In the realm of investing, corrections in the stock market can present both obstacles and possibilities. Recently, during a significant market correction, I opted to “buy the dip”—but this time, I markedly increased my investment. Instead of my typical range of $25,000 to $100,000, I allocated over $1 million into a diverse selection of the S&P 500 and various technology stocks, including heavyweights such as Meta, Microsoft, and Amazon.
## An Unprecedented Investment
This latest investment was unlike any previous endeavors I had undertaken. While I had earlier injected about $600,000 in late 2017, that investment followed the divestment of my largest rental property, which brought in a considerable profit. Contrarily, this recent influx of capital happened during a market downturn, urging me to readjust and reinvest a significantly larger amount.
The experience was laden with anxiety and doubt, especially considering the substantial declines I was encountering in my existing portfolio. Historically, the stock market has averaged returns of around 10% annually, but corrections of 20% or more are not rare occurrences. The apprehension of jeopardizing my current investments made acquiring additional stocks even more intimidating.
## Grasping the Challenge of Buying the Dip
Historically, I have not hesitated to buy during market downturns. My journey began in 1997 with modest investments amid the Asian Financial Crisis. However, the larger the sum I was willing to invest, the heavier the psychological weight I felt. The idea of committing $1 million into a declining market is one that carries significant gravity, especially when losses can escalate exponentially.
Indeed, major corrections—such as the 32% decline of the S&P 500 in March 2020 or the 50% decrease during the 2008-2009 Global Financial Crisis—can unsettle even the most experienced investors. In such scenarios, I have consistently favored a dollar-cost averaging (DCA) strategy more aggressively. However, when it comes to deciding to inject more cash during chaotic times, this can prove to be a substantially harder task.
## Tactics to Alleviate the Fear of Buying the Dip
If you share the apprehension of investing during corrections, know that you are not alone. To ease the anxiety of making significant investments in uncertain conditions, here are essential strategies I utilized that might be beneficial for you too.
### 1. Share the Wealth with Family
One efficient method to mitigate fear is to distribute a portion of your newfound wealth among your family. Following my liquidity event, I allotted $50,000 to my wife and $25,000 each to my children’s custodial investment accounts. This not only alleviated some burden but also fostered a sense of security and purpose, as I knew I was safeguarding their future while navigating my own investment adventure.
### 2. Prioritize Responsible Financial Decisions
Before plunging into the stock market, it’s prudent to allocate funds for essential expenses and alleviate financial strain. This may encompass paying off debts, undertaking home repairs, or investing in health. For instance, I opted to repair my car and hot tub prior to entering the stock market, which helped me feel more prepared to face potential market losses.
### 3. Formulate an Investment Strategy
Establishing a clearly defined investment plan serves as a crucial anchor during market fluctuations. This should detail your target asset allocation, investment timeframe, and a clear method for responding to market dips. By documenting my investment approach, I not only clarified my thoughts but also reinforced my dedication to my plans amidst market volatility.
### 4. Adopt a “Go Broke” Mindset
Embracing a perspective where you regard your investment as “gone” the moment you invest can significantly lessen emotional attachment and associated stress. Instead of perceiving the funds as lost, view them as a mechanism to secure your family’s financial future. This shift in outlook can mitigate the anxiety associated with market downturns.
### 5. Lengthen Your Investment Perspective
Approaching the stock market with a long-term viewpoint—at least 10 years—can provide reassurance against short-term fluctuations. Historically, the chances of profitability rise significantly over extended investment horizons, making it easier to endure downturns without succumbing to panic.
### 6. Acknowledge the Reality of Losses
One of the most challenging lessons in investing is accepting that losses are a part of the process. Even a seemingly reliable investment can underperform. By mentally preparing for losses, you equip yourself to better navigate market shifts and eventually take advantage of future buying opportunities.
### 7. Wisely Manage Cash Reserves
It’s essential to maintain liquidity while capitalizing on dips. Running out of cash can leave you feeling trapped during a market downturn. Keeping reserves will enable you to take advantage of deeper corrections without feeling desperate.
## The Truth About Stress
The experience of investing over several weeks during the stock market correction was fraught with stress. Balancing family obligations and