Wall Street at a Crossroads: Wait It Out, or Keep Buying the Dip?

Mikirduit – With U.S. stocks drifting sideways and AI enthusiasm under scrutiny, a look back at the 2021 tech boom suggests a simple, low-stress approach.

Key Takeaways

• The Fed meeting on Oct 27-28 is the next catalyst. Markets price in an 82% chance of a rate hold, which could support stocks short term. But with oil near $100 a barrel, a December hike is still possible.
• Buying hot AI stocks near a peak is risky. Rising costs and slowing revenue growth at AI leaders have investors asking whether the boom can pay off, and latecomers could get stuck at high prices.
• Monthly investing in a broad index ETF held up best. Since the 2021 tech peak, $100 a month in the S&P 500 ETF (IVV) gained 50% to 67%, while single stocks like UPST and PFE lagged badly.

U.S. stocks have stopped climbing and started to wobble. For investors, the question is familiar: sit on the sidelines and wait for clarity, or keep investing a set amount every month and bet that the AI boom lasts into 2027?

Here is what’s on the table right now, and what history says about investing near a market peak.

The Fed Is the Next Big Catalyst

All eyes are on the Federal Reserve’s meeting on October 27-28, 2026. As of October 20, the CME FedWatch tool put the odds of the Fed holding rates steady at 82%. If that plays out, it could give stocks a short-term lift through October and November.

That optimism comes with a catch. Much depends on upcoming inflation and jobs data, and with oil still around $100 a barrel, the chance of a rate hike in December remains very real.

Is the AI Trade Getting Crowded?

Investors are also asking harder questions about AI companies. Can they turn a profit if the economy slows? Costs for materials and production are rising, and recent data points to slowing revenue growth at both OpenAI and Anthropic.

The risk is that buying today’s hottest AI-related stocks means buying at a high price. If the market consolidates, latecomers could be stuck holding shares well above where they bought.

AI Stocks Slide: Buying Opportunity or Warning Sign?

The Nasdaq-100 fell 2.5% as credit stress at CoreWeave, sticky inflation and slowing growth at OpenAI and Anthropic rattled AI stocks. Some names now look cheap, but is it a real buying opportunity or a trap? Here’s what’s driving the drop and what investors should watch next.

Mikirduit USSurya Rianto

A Stress Test: Buying Near the Top in 2021

To see how investing at elevated prices can play out, we ran a simple experiment. We started in the 2021 tech rally, a time of high valuations and big enthusiasm, and invested $100 every month through October 2026, a strategy known as dollar-cost averaging (DCA).

We tested five assets, each representing a different type of investor experience:

• Sea Ltd. (SE) and Upstart (UPST): former high-flyers that faded, with UPST especially volatile
• Pfizer (PFE): a dividend-paying stock that lost ground
• Tesla (TSLA): a boom stock that came back
• iShares Core S&P 500 ETF (IVV): a broad index fund, for comparison with single stocks

Because nobody buys at the perfect price, we show a range for each: the worst case (buying at each month’s high) and the best case (buying at each month’s low).

The Results

What Stands Out

• The former darlings struggled. Even with disciplined monthly buying, UPST lost money in every scenario. SE ranged from a loss to a modest gain, depending on timing.
• Dividends made a real difference for Pfizer. Without them, every scenario was a loss. With them, the results improved noticeably.
• Tesla was the comeback story, but picking it in advance would have taken a lot of conviction and some luck.
• The S&P 500 ETF was the steady winner. Even in its worst-case scenario, buying at every monthly high, IVV returned more than 50%, with a smaller gap between best and worst outcomes than most of the individual stocks.

The Takeaway: Keep It Simple

The experiment points to a straightforward approach for investing when the market is near its highs: dollar-cost average into a broad index ETF over the medium to long term.

This has two advantages. If the market keeps climbing, you’re already participating. If it pulls back, you can keep buying at lower prices and wait for the next upswing.

An index fund also spares you from guessing which sector will lead the next boom. If AI, or whatever comes next, takes off, those companies will likely become part of the S&P 500 anyway, and your portfolio will capture some of that growth without a concentrated bet.