How far will the next market drop be? Uncertainty is possibly the only real constant in financial markets. In this PERSPECTIVES Special, we compare and contrast the advantages and challenges of buying an asset when its value dips with those of holding the same asset and hedging it against large losses.

Key takeaways

  • On April 9, one week after President Trump’s “Liberation Day”, investors poured USD31bn into equities, fuelling a rally thereafter. This exemplified the large-scale adoption of a “buy the dip” strategy.
  • We discuss what it takes for a “buy the dip” strategy to be successful.
  • For investors who prefer an “offensive-defensive” strategy, being invested with a hedge is an alternative.

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The PERSPECTIVES Special is currently available and client-ready for the following regions: Germany, Americas, Europe, Middle East, Africa and Asia Pacific.

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In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S.

The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

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Change of name: As part of Deutsche Bank’s Private Bank, the former International Private Bank also adopted this title on July 20, 2023.