Because they will happen. On the next major dip, this formula will be preferred:
Major selloff: Projected re-entry points/percentage of position(s)
Possible reversal, Day 1: 10%
Possible reversal, Day 2: 20%
Possible reversal, Day 3: 30%
Possible reversal, Day 4: 40%
The translation in terms of Apple during the recent selloff (and 19.8% dip from its high of 191):
Day 1: 10% at 175 (closing price) (Thur Nov 8)
Day 2: 20% at 165 (Fri Nov 9)
Day 3: 30% at 153 (Mon Nov 12)
Day 4: 40% at 160 (on the open of rally day) (Tue Nov 13)
Apple closed today (Day 4) at 169.
This would be known in some circles as a version of a Pyramid approach to buying on the dip. Apply stop-loss marks as desired.
Of course, the best approach is to buy and hold a great stock and quit sniffing at the minute-by-minute fluctuations. And best to enter after the storm has passed. Today's opening price at 160 was just fine for those who wisely waited.
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