When to Buy Stocks

You're a passive investor. You're not trying to day trade. You want to own great businesses and let them compound. The question is: when's the right time to buy?

Here's the simple truth: You can't predict the exact bottom. But you don't need to.

The Strategy That Works

Buy quality companies when they experience rare, extreme dips from their recent highs. That's it. That's the strategy.

Not every dip—stocks dip constantly. Just the truly exceptional ones (5-10x+ deeper than typical). These rare events happen once a year or less, so patience is essential. When a quality stock reaches these extreme levels, that's your signal to investigate. Learn more about understanding market dips →

Understanding "Unusual" Dips

Every stock has its own personality. Some are volatile (big swings are normal). Others are rock-stable (even small dips are rare).

Here's what matters:

• Typical dip: How far this stock usually drops during normal pullbacks
• Current dip: How far below its recent high it is right now
• Rare opportunity dip: When current is 5-10x+ deeper than typical (happens once a year or less)

Real Examples from Our Data

Let's use actual numbers from stocks in our system:

Microsoft (MSFT): Typically dips 3.3% during normal pullbacks. So a 10% drop? That's 3x typical—worth investigating.

Apple (AAPL): Typically dips 5.0%. A 15% drop would be 3x typical—unusual for Apple.

Tesla (TSLA): Typically dips 9.9% (more volatile). A 10% drop? Just normal noise. A 50%+ drop? That's 5x+—now it's a rare opportunity worth investigating.

Same percentage drop, completely different meanings. This is why you need historical context for each stock. We're hunting for the extreme outliers—the 5-10x+ events that require serious patience.

The Most Important Rule

Just because something is on sale doesn't mean it's a good buy.

A 50% discount on a failing business is still a terrible investment. A 90% dip in garbage is still garbage.

The right process:

1. Pick quality first: What businesses do you actually want to own for 5-10 years?
2. Create your watchlist: Your "shopping list" of companies
3. Set alerts and wait: Let autopilot monitor them daily
4. Buy when they go on sale: Get alerted when YOUR stocks hit unusual dips

You're not buying "whatever is cheap." You're targeting specific quality businesses and waiting patiently for the right price. This is the essence of passive investing—disciplined patience with strategic action.

Why Most Investors Miss Opportunities

The problem isn't information—it's attention. You can't monitor 10-20 stocks every day, calculate their historical patterns, and recognize when dips are unusual.

Even worse, constant monitoring leads to poor decisions. You see a normal 3% dip and think it's a deal. Or you miss a genuine 20% dip because you weren't watching that day.

This is why autopilot works: Set your watchlist, tune out the noise, get alerted on the few days that actually matter.

A Couple Great Buys Per Year

If you're monitoring 15 quality companies, truly rare extreme dips (5-10x+ severity) happen infrequently—for low-volatility stocks, once every couple years on average. That's maybe 5-10 exceptional opportunities across your entire watchlist over a couple years.

You don't act on all of them—just the handful where you have capital available and fundamentals still look good. Maybe 2-3 exceptional buys over a couple years total. Patience is the absolute key skill.

A couple of great investments at truly exceptional prices (once a year or less per stock), compounded over years, beats constant trading every time.

The Bottom Line

When should you buy stocks?

When quality companies you want to own experience rare, extreme dips (5-10x+ deeper than typical) from their recent highs. Not every dip. Just the truly exceptional ones that happen once a year or less. Not random companies on sale. Just the quality businesses on your watchlist.

You don't need to time it perfectly. You need serious patience, a quality watchlist, and a system that alerts you when these rare opportunities appear. As Warren Buffett says, "Be fearful when others are greedy, and greedy when others are fearful." Explore more investing wisdom →

That's the entire strategy. Simple to understand. Hard to execute manually. Easy with autopilot.