buying after a small (1%) market drop

[Lsbcal]

... I moved $1000 in "excess" cash into FZROX on Thursday. My gain on Friday was a whopping $12 and change. Wheeeee!

You should have gone right down to McDonalds and had a big Mac.

 

[big-papa]

I have found numerous stories about missing out on the 5, 10, 15 best days of the market each year and how much that would reduce your stash. Time IN the market vs TIMING the market. What I cannot seem to find (please point me in that direction if you can) is what would be your results if you added some cash the day after the market lost 1% or more. So let's say you start on 1 Jan with 100K. On 2 Jan the market drops 1% so you add 1K. Never selling. How would that strategy work? I did a quick (15 minute) internet search and could not find anything like that. Thanks

Over on the bogleheads forum, a poster by the name of Livesoft has been using something he calls "RBD" aka "Really Bad Day" since the early part of the previous decade. You can search there and get more info. However he's always a little cagey about his exact algorithm, but it goes something like this for purchasing more stock:

Stock must drop 2.5% or more
The drop must be greater than the 4th biggest drop in the last 150 days
Drop must not be on a Friday
He's stated that if you make such a purchase, it should be in the range of about 10% or so. Then if the stock subsequently goes up 2-5% then sell it. If it doesn't go up at all, then sell it. But don't give it more than a week or so before selling.

Somebody once had a website set up that would flag such triggers, but I can't find it anymore.

Oh and I don't do this myself.

 

[Andre1969]

Sometimes, in my 401k accounts, if it looks like it's going to be a bad enough day (or a good enough day), I'll do a bit of rebalancing in my mutual funds. But, I'll only do that if the asset allocation is far enough out of whack, compared to where I want it to be.

But, my allocation was close enough to where I wanted it to be, and I had a feeling the ~1% drop that was getting pretty obvious by the end of the trading day on July 8 wouldn't have thrown it out of balance all that much, so I did nothing. And then, on July 9, it all came back, and then some.