Don’t Be a Dip and Buy the Dip

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Last year, after the March market correction, I warned baby boomers against buying the dip. Since the market rebounded 100%, that was bad advice. But I double down on that advice today for the same reason. Baby boomers cannot afford the risk. Someday, there will be a series of dips on the way to a prolonged market retreat.

Will the next dip be the first in a long sequence of dips to follow?

One of my most-read articles, Baby Boomers Should Not 'Stay The Course' Because Most Are On The Wrong Course, attracted more than 60,000 readers and was written shortly after the March 2020 market correction.

Readers who took my advice back in July 2020 are surely cursing me now because the stock market recovered big time, doubling in value from its March low. But my advice is the same in this recent dip. In fact, I’m more emphatic this time, in large part because the stock market has reached even higher highs. More baby boomers have entered the “risk zone” spanning the 5-10 years before and after retirement when investment losses can irreparably ruin the remainder of their lives.

Baby boomers cannot afford the 60/40 stock/bond risk that they are taking.

Baby boomer warning extends to their heirs and advisors

There are 78 million baby boomers who collectively own $60 trillion in assets. They are at risk. Research by the Employee Benefit Research Institute (EBRI) reports that the average baby boomer is invested 60/40 stock/bonds. despite the danger of sequence-of-return risk. A 60/40 allocation lost more than 30% in 2008, but boomers were not in the risk zone then. Now, most boomers will spend much of this decade in the risk zone.