Should you 'buy the dip' amid the latest stock market volatility? What experts say

After weeks of stock market declines amid the U.S.-Iran war, some investors may be eyeing a chance to "buy the dip," or purchase assets at temporarily lower prices, which can offer higher returns when the market rebounds. But the move carries risks, some advisors say.

Buying the dip was popular among retail investors during key market drawdowns in 2025. But the trend has slowed since the start of the Middle East conflict.

The strategy "sounds great, but timing it is really hard" since no one can predict future market moves, said certified financial planner Joon Um, managing owner of financial firm Secure Tax and Accounting in Hayward, California.

If you're experiencing "FOMO" — fear of missing out —about buying opportunities during the current downturn, Um said, keep in mind that "missing one dip won't hurt you, but making an emotional decision might."

The Dow Jones Industrial Average on Friday closed nearly 800 points lower at 45,166.64, while the S&P 500 shed 1.67% and fell to a seven-month low, ending the session at 6,368.85. The tech-heavy Nasdaq Composite dropped 2.15%, sliding to 20,948.36.

There was some market relief Monday after comments from Federal Reserve Chair Jerome Powell calmed investors' fears about an interest rate hike triggered by rising energy prices.

In a Truth Social post earlier Monday, President Donald Trump said that "[g]reat progress has been made" in Iran negotiations, but he threatened to destroy the country's oil infrastructure if a peace deal doesn't happen "shortly."

The S&P 500 ultimately closed lower on Monday, bringing it closer to correction territory, down about 9% from its 52-week intraday high. But stock futures were higher Tuesday morning after The Wall Street Journal reported that Trump said he was willing to end the war even if the Strait of Hormuz remained mostly closed.

During a market drawdown, some investors panic-sell, while others seek discounted assets. If you fall into the latter category, it may be tempting to quickly dump cash into investments for longer-term goals, such as your retirement.

But typically, the strategy works best as part of a broader plan, according to Jon Ulin, a CFP and managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida.

In some cases, investors maintain a certain level of "dry powder," or cash for buying opportunities, which can be used for specific assets at predetermined prices. Ulin recommends doing this with a diversified portfolio, rather than a single stock or assets such as gold or bitcoin.

But "success requires discipline," Ulin said. These purchases should always "fit a long-term plan rather than a short-term reaction" to market volatility, he said.

Of course, hoarding cash while waiting for rock-bottom prices before entering the market can also be risky, experts say.

There's a cost to missing the market's best-performing days, which often closely follow the worst days, according to JPMorgan Asset Management research.

If you're currently sitting on a larger lump sum, Ulin recommends "dollar-cost averaging," or investing fixed amounts during set intervals, over three or four months rather than "waiting on the sidelines for clarity that rarely arrives."