There appears to be a level of legitimacy based around fundamentals and investment research whose disintegration seems to be accepted more as each day passes. It is yet another part of an increasingly logic-defying investment environment.

One of the odder narratives that has been actively perpetuated by the legitimate and illegitimate alike is the idea of “buying the dip”, whether referring to crypto, stocks, or even real estate. 

This oftentimes defeats all sense of logic and reasoning. Buying an asset/financial instrument after its sudden price decline with the expectation that it must rise is not an acceptable investment strategy; when an asset suddenly loses value it does not and should not insinuate that it is undervalued. It is certainly possible that it is, but determining that can only be done through quantifiable research.

One of the more important lessons taught as part of any investment or finance program is to disassociate with the ephemeral emotions we sometimes have, one of the more prominent being the “fear of missing out.”

The entire premise of investment research and management is to conduct rigorous due diligence that appropriately valuates any given asset’s price. This is a process that revolves around using concrete and tangible data to guide your decisions, not one that relies on your emotions. The product of this research is used as the foundational driving force which dictates whether buying at price <x> is sound.

I could speculate that as a result of a wildly volatile crypto market combined with an influx of unsophisticated retail investors, the hollow “buy the dip” philosophy has ensued and tainted even legitimate investors.

One can imagine that several months ago, seeing unsophisticated retail investors amass fortunes on crypto and NFT bets played into the emotions of those who have spent their careers researching and investing in good quality companies. 

But just as soon as those fortunes were amassed, they were erased. This should be a stark reminder that no one and no asset can defy the laws of logic for too long.