Summary: Veteran trader warns against buying stocks on dips without thorough research.

From Yahoo Finance: 2025-04-05 10:30:00

Investors often buy stocks when prices drop, thinking it’s a smart move. However, Wall Street veteran Kenny Polcari warns that dips can indicate larger problems. Enron and Lehman Brothers investors suffered significant losses after continuous declines. Polcari advises disciplined buying based on research, not blind faith.

Buying low can lead to high returns, but only if investors assess the company’s fundamentals. Polcari stresses the importance of evaluating earnings, debt levels, and market conditions before buying dips. Understanding the difference between price and value is key to successful investing, requiring patience and research.

In Trader Talk, Polcari emphasizes the need for a clear investment thesis before buying dips. It’s crucial to review financial statements, earnings reports, and sector performance to avoid catching a falling knife. Successful investors wait for genuine opportunities, using discipline and fundamentals as their guide for smart investments.

Read more: Should you buy the dip? Veteran trader explains why it ‘isn’t always the smartest thing to do’