Buying the US dip scores big gains for retail investors

Buying the dip seems to have paid off for retail investors, with the strategy helping them collect their biggest YTD gains since the pandemic, the Financial Times reported. Retail investors have poured some USD 155 bn into Wall Street and ETFs this year, offsetting the market’s April losses caused by US tariffs, according to data from VandaTrack.

By the numbers: Buying-the-dip investors enjoyed an estimated cumulative return of 31% this year from investing in the Nasdaq 100 index, heavy on large-cap US technology stocks, analysis by Bank of America (BoA) showed. Returns on the index — which has gained 7.8% YTD — are the best for BoA’s hypothetical dip-buying model since early 2020, and the second best on record since 1985.

Investors have increasingly acquired the habit of buying into stock weakness since the 2008 global financial crisis, as US markets’ downturns have proven to be short-lived. “Pops and drops will occur… but the dip-buying belief has become the new religion,” Mike Zigmont of Visdom Investment Group told the salmon colored paper.

Right on the money: The S&P 500 and Nasdaq Composite closed at all-time highs on Friday as investors became increasingly confident the Trump administration will not move forward with severe tariffs. The plans sent stock markets tumbling when they were announced back in April, with the following months seeing increasing volatility.

BUT- The strategy is risky, as dip-buyers opt not to cashout when prices go up, chair of asset management group Research Affiliates Rob Arnott told the FT. “Dip-buying works brilliantly until it doesn’t. When you have a meltdown, it’s a quick path to deep regret,” Arnott added.

MARKETS THIS MORNING-

Asian markets are mixed this morning, mostly inching down after Trump announced a new 1 August deadline for tariffs taking effect. Japan’s Nikkei is down 0.5%, while Hong Kong’s Hang Seng is down 0.4%. Meanwhile, Wall Street futures are collectively in the red, also weighed down by the announcement.

TASI	11,316	+0.6% (YTD: -6.0%)
MSCI Tadawul 30	1,451	+0.6% (YTD: -3.8%)
NomuC	27,257	-0.1% (YTD: -13.4%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	5.0% repo	4.5% reverse repo
EGX30	32,914	+0.3% (YTD: +10.7%)
ADX	9,982	+0.01% (YTD: +6.0%)
DFM	5,753	+0.1 (YTD: +11.5%)
S&P 500	6,279	+0.8% (YTD: +6.8%)
FTSE 100	8,823	0.0% (YTD: +8.0%)
Euro Stoxx 50	5,289	-1.0% (YTD: +8.0%)
Brent crude	USD 68.30	-0.7%
Natural gas (Nymex)	USD 3.39	-0.7%
Gold	USD 3,347	+0.1%
BTC	USD 109,404	+1.1% (YTD: +17.0%)
Sukuk/bond market index	911.63	-0.2% (YTD: +1.1%)
S&P MENA Bond & Sukuk	145.82	-0.1% (YTD: +4.2%)
VIX (Volatility Index)	17.48	+6.7% (YTD: +0.8%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.6% yesterday on turnover of SAR 4.3 bn. The index is down 6% YTD.

In the green: Acwa Power (+8.0%), Naseej (+6.6%) and SAPTCO (+5.6%).

In the red: Sipchem (-1.8%), SIECO (-1.7%) and Alistithmar Reit (-1.4%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.1% yesterday on turnover of SAR 18.9 mn. The index is down 13.4% YTD.

In the green: Al Rasheed (+13.3%), Naseej Tech (+6.5%) and Aljouf Water (+6.3%).

In the red: United Mining (-9.0%), Itmam (-6.1%) and SMC (-6.1%).

CORPORATE ACTIONS-

Sure Global Tech will distribute SAR 11.5 mn in cash dividends for FY 2024 to its shareholders, at SAR 1.5 apiece, according to a disclosure to Tadawul (pdf). The distribution date is set for Tuesday, 8 July.