‘I’m done with Trump,’ fumed a normally MAGA-supportive retail trader as he watched an investment that was particularly Hormuz-sensitive collapse. But, perhaps surprisingly, his frustration at the war is not shared more widely by stock pickers.

Despite the geopolitical turmoil of the war in Iran, equities (shares in listed companies) have been on an upward romp for the past year. Since Donald Trump was inaugurated for the second time, the Standard and Poor’s 500 index is up 25 per cent. Stock markets almost everywhere have been hitting record high after record high.

It doesn’t make much sense. This hasn’t been a good year for the world economy. The constant closing and reopening of the Strait of Hormuz sent oil prices skyward. In turn, expectations of resurgent inflation across the globe have pushed bond yields ever higher. Britain has suffered particularly badly thanks to our structural susceptibility to higher prices. But, oddly, equities have seemed immune.

The strategy turns weakness into opportunity through the assumption that the stock will bounce back

The strategy turns weakness into opportunity through the assumption that the stock will bounce back

Why? One answer seems to be thanks to retail investors ‘buying the dip’. The strategy takes the age-old market maxim of ‘buy low, sell high’ and turns weakness into opportunity through the – often blind – assumption that the stock will bounce back. When markets are surging and the rise of a stock looks relentless, the day-to-day news cycle or a quarter of underperformance can cause a........

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