12-07-2021, 06:48 AM
"Buy the DIP" vs "Sunk Cost Fallacy"
<!-- SC_OFF --><div class="md"><p>The market is once again experiencing a significant pullback, for the 5 or 6 time this year. We could almost schedule our clocks after these pullbacks.</p> <p>Now there's a very prominent strategy, whether it's actually carried out, or just posted for moon farming is beyond the scope of this post, that's called "Buy the f****** DIP". Prices drop, so in theory, if the market recovers, it should be better to buy when it's cheap, which is the case after a crash. </p> <p>On the other hand, there's the "Sunk Cost Fallacy", which is more of a tendency, after having invested time and money into something, to continue doing it, without rejudging it's cost-benefit ratio. So for someone, who's dropped half their life-savings into crypto, it would seem important to continue buying, when prices drop, to make it worthwhile, whereas for someone who's not invested at all, they wouldn't feel the same compulsion to "buy the dip".</p> <p>It seems, these two ideas are contrasting each other and one could argue, that buying the dip is just a different form of sunk cost fallacy, because if one had done proper research and invested into solid projects, there'd be no reason to have to keep buying every dip, to make the initial investment worthwhile. </p> <p>Getting into an investment, when it's price is low is certainly profitable, however, that decision should be based upon market analysis and future growth potential, and not be influenced by our previous investments.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Randomized_Emptiness"> /u/Randomized_Emptiness </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/ra3xlg/buy_the_dip_vs_sunk_cost_fallacy/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/ra3xlg/buy_the_dip_vs_sunk_cost_fallacy/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>The market is once again experiencing a significant pullback, for the 5 or 6 time this year. We could almost schedule our clocks after these pullbacks.</p> <p>Now there's a very prominent strategy, whether it's actually carried out, or just posted for moon farming is beyond the scope of this post, that's called "Buy the f****** DIP". Prices drop, so in theory, if the market recovers, it should be better to buy when it's cheap, which is the case after a crash. </p> <p>On the other hand, there's the "Sunk Cost Fallacy", which is more of a tendency, after having invested time and money into something, to continue doing it, without rejudging it's cost-benefit ratio. So for someone, who's dropped half their life-savings into crypto, it would seem important to continue buying, when prices drop, to make it worthwhile, whereas for someone who's not invested at all, they wouldn't feel the same compulsion to "buy the dip".</p> <p>It seems, these two ideas are contrasting each other and one could argue, that buying the dip is just a different form of sunk cost fallacy, because if one had done proper research and invested into solid projects, there'd be no reason to have to keep buying every dip, to make the initial investment worthwhile. </p> <p>Getting into an investment, when it's price is low is certainly profitable, however, that decision should be based upon market analysis and future growth potential, and not be influenced by our previous investments.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Randomized_Emptiness"> /u/Randomized_Emptiness </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/ra3xlg/buy_the_dip_vs_sunk_cost_fallacy/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/ra3xlg/buy_the_dip_vs_sunk_cost_fallacy/">[comments]</a></span>Kind Regards R