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After weeks of stock market declines amid the U.S.-Iranian war, some investors may be looking at opportunities to “buy on the edge,” or buying assets at temporary lows for higher returns when the market recovers. But some advisers say the move comes with risks.
During the 2025 downturn in major markets, short-term buying was popular among retail investors, but this trend has slowed since the Middle East conflict began.
The strategy “sounds great, but it’s very difficult to time” because no one can predict future market movements, said Joon Eum, a certified financial planner and managing owner of Secure Tax and Accounting, a financial firm in Hayward, California.
If you’re feeling “FOMO” (fear of missing out) about purchasing opportunities during the current economic downturn, keep in mind that “missing a push won’t hurt you, but making an emotional decision can.” Um said.
On Friday, the Dow Jones Industrial Average fell nearly 800 points to close at $45,166.64, while the S&P 500 fell 1.67% to a seven-month low, closing at $6,368.85. The Nasdaq Composite Index, which has a high proportion of high-tech stocks, fell 2.15% to 20,948.36.
Markets felt some relief on Monday after comments from Federal Reserve Chairman Jerome Powell eased investors’ worries about interest rate hikes due to rising energy prices.
President Donald Trump said in a post on Truth Social early Monday that “significant progress has been made” in negotiations with Iran, but threatened to destroy the country’s oil infrastructure if a peace deal is not reached “soon.”
The S&P 500 index ultimately ended lower on Monday, down about 9% from its 52-week intraday high and nearing correction territory. But stock futures rose Tuesday morning when the Wall Street Journal reported that President Trump said he was prepared to end the war even if the Strait of Hormuz remained mostly closed.
Gain momentum towards long-term goals
During market downturns, some investors panic and sell, while others seek discounted assets. If you fall into the latter category, you may want to immediately put your cash into investments for your long-term retirement goals.
But the strategy usually works best as part of a broader plan, says John Ulin, CFP and managing principal at Ulin & Company Wealth Management in Boca Raton, Florida.
In some cases, investors can maintain a level of “dry powder,” or cash, for purchase opportunities and use it for specific assets at predetermined prices. Urin recommends doing this with a diversified portfolio rather than a single stock or asset like gold or Bitcoin.
But “success requires discipline,” Ulin said. Such purchases should always be “fit into long-term planning, not a short-term reaction” to market volatility, he said.
Of course, waiting for the bottom and hoarding cash before entering the market can also be risky, experts say.
Research from JPMorgan Asset Management shows that there is a cost to missing out on the market’s best days, which often come right after the worst.
If you’re currently paying a large sum of money in one lump sum, Urin recommends “dollar-cost averaging,” or investing a fixed amount at set intervals over three to four months, instead of “sitting on the sidelines for hard information that is rarely available.”
