Buy the Dip: 1 in 5 will buy stocks if the market crashes

One in five Canadians, or an estimated 5.7 million people, say they will ‘buy the dip’ in 2022 should the stock market crash, according to a survey of 1,206 Canadian adult Internet users.

14% of Canadians already own shares and they plan to buy more should the market drop significantly, while 5% say they don’t yet own stocks but plan to buy if the market crashes. Meanwhile one in ten Canadians already own stocks and don’t plan on buying more if the market dips.

Men most likely to invest more in stocks during a crash

Men are much more likely to ‘buy the dip’ than women, with 24% of men planning to buy stocks at a discount if the market crashes compared to just 14% of women.

Millennials and Gen Z most likely to buy stocks during a market crash

The younger you are, the more likely you are to plan on buying the dip in 2022. Just over a quarter of those aged 25-34 plan to buy, compared to just 11% of those aged 65+ who say the same.

How popular is ‘buying the dip’ in other countries?

Of the four countries Finder surveyed, Singaporeans are most likely to plan on buying the dip, with 27% of Singaporean adults expressing plans to buy if the market crashes. Meanwhile around 20% of people in the United States say they’ll buy stocks if the market drops, while just 12% of Brits plan to buy the dip.

How big is the stock market correction right now compared to historical market crashes?

The beginning of 2022 has seen a bear market take hold as global stock markets dip amid events like Russia’s invasion of Ukraine and many central banks increasing interest rates. This has seen everyone from inexperienced retail newbies to seasoned investors re-evaluate their portfolios and wonder if this is a great buying opportunity, or there is more pain to come.

In order to put this current market dip into perspective, we are tracking the S&P 500’s value every day and comparing it to the worst market crashes of the last 50 years.

Tips for weathering a stormy stock market

While our survey found nearly 6 million Canadian investors plan to ‘buy the dip’ should the market crash, these investors would be wise to not assume they can turn a quick profit. Historically market crashes can take a long time to reverse, typically several months, and sometimes even years. Investors should have a plan in place to weather the storm.

• Don’t Panic — One of the worst things an investor can do when the market enters bear territory, or a prolonged downturn is to panic sell. It’s best to know the type of risk you are willing to take on, and for how long, before you increase your exposure to equities.
• Diversify — High-flying growth stocks, or newer industries that have yet to fully prove their worth, tend to suffer the most in a bear market as investors generally move to more proven, less ‘risky’ assets. Diversification across asset classes, sectors and types of stocks (growth, value, blue chips etc.) will reduce your exposure to risk, which could mean your portfolio will take less of a hit during the downturn.
  
• DCA — Dollar cost averaging, essentially buying a stock at regular intervals, is a great strategy to use during downturns to bring down your average cost and accumulate more shares of a company you have high long-term conviction in.

Methodology

Finder used Google Survey to poll 1,206 Canadian internet users. Due to the varying Google infrastructure in each territory, not all surveys were nationally representative. Where a nationally representative sample was unavailable, a natural fall/convenience sample was used. For these, Google didn’t use stratified sampling but did apply weights to the survey results if the demographics of the survey respondents didn’t vary too far from demographics data. The details of Google’s survey methodology can be found here.

• United States: A convenience sample of 2,002
• United Kingdom: A convenience sample of 2,024
• Canada: A convenience sample of 1,206
• Singapore: A convenience sample of 1,008