‘Prepare to Buy the Dip,’ Says Investor About Vanguard S&P 500 ETF (VOO)

Markets aren’t known for embracing uncertainty, and the fog of war in the Middle East – along with disruptions in the global oil trade – weighed heavily on sentiment throughout March. In recent weeks, however, the mood has shifted, as growing anticipation of a ceasefire and potential peace talks has helped lift investor confidence.

For a tangible demonstration of this dynamic, look no further than the Vanguard S&P 500 ETF (VOO). The ETF, which, as the name suggests, tracks the S&P 500, has ripped off a double-digit run over the past few weeks on its way to a new peak after mostly trending downhill in the prior month.

While all ETFs offer diversification, Vanguard S&P 500 ETF gives investors access to the largest U.S. companies across a wide range of industries, with a market-cap tilt that leans heavily toward tech. With an expense ratio of just 0.03%, it stands out as a highly efficient way to tap into that exposure.

Still, there’s growing hesitation about chasing the move at current levels. While calling VOO the “ideal ETF,” investor Anthony Di Pizio cautions against going all in at current levels.

“History points to surprisingly modest returns going forward,” the investor noted, pointing out that the index is now trading above 20 times forward earnings. Drawing on research from JPMorgan Chase, he added that starting from such valuations has historically translated into annual returns of roughly 5% or less over the following decade.

At the same time, that caution sits alongside a powerful long-term record. The S&P 500 has generated an average annual return of roughly 10.5% since 1957, a figure achieved despite repeated drawdowns of 20% or more, including several in the past two decades alone.

Volatility, in other words, is part of the journey. As Di Pizio points out, investors who stepped in after those pullbacks tended to fare “extraordinarily well.” By contrast, committing a large lump sum at record levels, he suggests, “won’t be the most rewarding strategy.”

As a result, Di Pizio favors a dollar-cost averaging approach, gradually building exposure through consistent, fixed investments over time, particularly in an environment where uncertainty has not fully dissipated and could resurface if tensions around the Strait of Hormuz escalate once again.

“If more volatility does strike, that might be the time to invest more aggressively,” concludes Di Pizio. (To watch Di Pizio’s track record, click here)

Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.