1. Knee-Jerk Buying – A Quick Reaction
Some people buy a stock just because it went down. They think, “It’s cheap now. It will go up soon.”
This works sometimes. But not always.
Some stocks fall for real reasons—like a bad business or too much debt.
Lesson: Don’t buy only because a stock is down. Ask why it’s down.
2. Chart-Based Buying – Following Patterns
Some investors wait for chart signals like RSI or moving averages. They buy when the chart says, “Now is the time.”
Charts can help a little, but they are not always right. And the profit can be too small after costs.
Lesson: Use charts, but don’t fully depend on them.
3. Smart Filtering – Pick the Right Kind of Cheap
This strategy looks for stocks that are cheap *and* strong.
Damodaran suggests checking:
* Low PE ratio (less than 15)
* Good dividend (above 1%)
* Low debt
These filters help. But even strong companies can struggle if the business is outdated.
Lesson: Filters reduce risk but don’t remove it fully.
4. Be Patient and Prepared
This is Damodaran’s favorite way.
You make a list of great companies you want to buy. You wait until fear hits the market and prices fall. Then you buy—but only if the value is right.
Lesson: Be ready before the crash. Act when the time is right.
#The Most Important Part: You
None of these strategies will work if you don’t have:
* The mindset to stay calm
* The patience to wait
* The courage to handle losses
Buying the dip is not just a smart move.
It’s an emotional test.
## Final Thought
Being a contrarian—someone who goes against the crowd—means more than finding deals. It means staying strong when others are scared.
Before you buy the dip, ask yourself:
Can I really handle what comes next?
Launch your Graphy