For the first time in 2026, the market is facing a real jolt of worry. The conflict in Iran has pushed equity volatility to its highest levels of the year. The 10-year Treasury yield briefly hit its lowest point since April 2025. Investors genuinely seem spooked.
Long-term investors could view this as an opportunity. If you believe that geopolitical events tend to be more short-term in nature, this could be a temporary dip that can be taken advantage of. At a high level, the U.S. economy is still expanding and corporate earnings growth remains robust. Those are the factors that support the long-term growth of equity prices even in the face of short-term volatility.
I generally keep some cash on the sidelines in my portfolio for times just like this. Short-term disruptions can be a chance to buy successful companies at discounted prices. But I don't try to buy individual winners or even specific sectors. I like to buy the whole market on the dip and simply take advantage of lower prices. For that, I buy the Vanguard Total Stock Market ETF (VTI 1.24%).
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Buying the whole market on the dips
Investors tend to use recent performance as a guide for where to put their money. Last year, tech ETFs saw some of the biggest net inflows as a result of the artificial intelligence (AI) rally. This year, however, has been a different story. The market has pivoted away from tech and into value, dividend, and cyclical stocks. The biggest ETF net inflows this year are going toward energy, industrials, and materials, which just happen to be the best-performing sectors of 2026 so far.
In my view, this is one of the biggest dangers of chasing specific sectors and recent performance. A lot of investors have kept a large percentage of their portfolios in tech and AI stocks, betting that the massive growth and investments being made into the sector would continue. Now, they're overweight one of the worst-performing sectors of the year and missing out on some of the double-digit gains in other sectors.
NYSEMKT: VTI
Key Data Points
Buying the whole market when stocks dip allows you to simply buy the entire economic narrative and avoid the risk of trying to pick specific winners. Using the Vanguard Total Stock Market ETF instead of the Vanguard S&P 500 ETF (VOO 1.14%) for buying the dip also gives you exposure to mid-caps and small-caps, an important segment of the market that's underperformed in recent years, but is staging an impressive comeback in 2026.
In my opinion, you don't need to be fancy when buying the dip. If the market presents the opportunity, buying the whole market instead of smaller segments of it may not produce the biggest gains. But it limits downside risk and gives you the best chance to simply capture the rebound.
