Says Resist Temptation to Buy the Dip

A $33 Billion Manager Says Resist Temptation to Buy the Dip

Pierre-Henri Flamand is the chief investment officer of Man Group Plc’s GLG unit.  He believes that market swings could continue.  As a result, he warned against a tendency to buy the dip after a correction in global markets.

“The instinctive inclination to buy the dip may be strong.” “As the past week has shown, this may not work so well. Indeed, I think what we have seen in the past week could continue for some time.”

The CBOE Volatility Index had its biggest single-day jump on Feb. 5.  Inflation worries led to a spike in bond yields and a plunge in global stocks.  Investors buying up securities after the tumble were hit when the S&P 500 Index resumed the decline later in the week.  This ended a five-day period down 5.2 percent.  The speed of the reversal has challenged the oft-repeated maxim that investors should buy after a decline as market signals are increasingly difficult to parse.