The Trend That Saved Us From A Brexit Meltdown
The initial dust has settled since Brexit, and investors continue to worry about the what it means for the market. But despite a 6.5% drop in S&P 500 futures heading by Monday’s trading, the market looks to have rebounded.
Investors who who are surprised at the lack of a bigger drop maybe shouldn’t be however, at least according to PreMarket Prep host Dennis Dick.
On Thursday’s edition of PreMarket Prep, Dick, a veteran trader and the show’s co-host, affirmed his strong belief that ever since the financial crisis ended back in 2009, we’ve been living in a “buy the dip market,” where investors have formed a habit of buying the market after a price decline in the hopes of a near-term recovery.
“It’s such learned behavior. We’ve talked about how by the dip just always works. And it didn't work back in 2006, 2007, 2008 because we had the financial crisis and a lot of people got blown up,” he said. “Any investor who has started just investing in the last seven years since 2009, has learned that buying the dip makes you money. Until we break that mentality, until we actually have a market crash where everybody loses by buying the dip, it’s going to be the predominant theme.”
Based on this trend, it seems that the post-Brexit volatility may be passed us. “From an S&P perspective here, it’s hard to fight that ‘buy the dip’ mentality.”
Listen to audio of Dennis’ rant at 51:10 in the clip below.
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