When Is the right time to buy during stock market's downtrend?

Experts from Dragon Capital analyzed 75 investment cases using the DCA strategy (Dollar-Cost Averaging)—investing a fixed amount each month—across three major events in Vietnam’s market history.

Since no one can predict the market bottom or choose the perfect entry point, the analysis aimed to determine whether investment results truly depend on timing the market correctly.

Can Investors Really Identify the Bottom?

According to the experts, the three crises selected all left clear marks in the history of Vietnam’s stock market.

In 2018, the market erased its historic peak of 1,211 points, while the U.S.–China trade war caused the VN-Index to fall 26% within six months, with no clear signal of where the bottom would be.

In 2020, the COVID-19 shock triggered the steepest collapse in modern history, with the VN-Index plunging from 1,204 to 662 points in just six weeks.

In 2022, problems related to the real estate sector, corporate bonds, and rapidly rising interest rates pushed the VN-Index down 40% over eight months, and no one knew where the downturn would end.

For each event, Dragon Capital examined 25 different investment starting points—representing 25 investors who began investing in different months, ranging from 12 months before the market bottom to 12 months after.

In every case, the strategy was identical: invest VND 10 million per month continuously without adjustment, using only real historical data rather than estimates.

Consistent Results Across 75 Investment Start Points

The analysis produced strikingly consistent results. After 12 months of regular investment, the DCA strategy outperformed the VN-Index in 83% of cases.

As the investment horizon extended, the advantage became stronger:

• 95% of cases after 24 months
• 100% of cases after 36 months

In other words, the longer investors maintained regular investments, the higher the probability that the DCA strategy would outperform the market index.

Even when the data was separated by each crisis event, the pattern remained similar. After 24 months of periodic investing, DCA outperformed the VN-Index in 84% to 100% of cases, and after 36 months, all cases outperformed the index.

Timing the Bottom Matters Less Than Consistency

The results did not change significantly regardless of whether investors started before, at, or after the market bottom.

Among investors who started before the bottom, 36 out of 36 cases outperformed the VN-Index after 24 months.

For those who started exactly at the bottom, there were only three cases (one per crisis), and all three also outperformed the index.

Even investors who entered after the bottom, waiting for markets to stabilize, still saw DCA outperform the VN-Index in 32 out of 36 cases (89%).

This suggests that periodic investment results remain relatively stable even when investors fail to choose the perfect entry point.

Lessons from Three Major Market Crises

The 2018 Event

The VN-Index fell about 26% in six months, with multiple technical rebounds along the way. Investors who started DCA early often experienced the frustration of continuing to buy while their portfolios remained negative for weeks.

However, within roughly two years, all 25 investment cases starting around the bottom eventually outperformed the VN-Index, regardless of the specific starting month. After 12 months, 64% of cases had already beaten the index.

This reflects the nature of a prolonged decline with frequent technical rebounds, where short-term signals become highly noisy.

The COVID-19 Shock

The VN-Index dropped 45% in just six weeks, the fastest and steepest decline in the market’s history. Yet the market quickly rebounded and reached new highs within 18 months.

Interestingly, investors who started DCA three to six months before the bottom, when sentiment was extremely negative, often achieved better results than those who started exactly at the bottom.

The reason: they accumulated more fund units at lower prices during the downturn and fully benefited when the market recovered.

After 12 months, all cases outperformed the VN-Index, while 84% still did so after 24 months.

The 2022 Correction

This downturn was driven largely by domestic market issues. The corporate bond crisis, difficulties in the real estate sector, and rapidly rising interest rates severely damaged investor confidence. The VN-Index declined roughly 40% over eight months.

While the market showed multiple warning signals, identifying the end of the decline remained extremely difficult.

After 24 months of regular investing, all 25 cases outperformed the VN-Index. At the 36-month mark, only 17 cases had complete data because later starting points had not yet reached 2026. Nevertheless, all 17 cases also delivered positive results.

The Key Takeaway

According to Dragon Capital experts, the data from these three crises reveals a clear pattern.

After roughly two years of consistent investing, the differences between various entry points become minimal.

Investors do not need to predict when the market will reach its bottom. Instead, they simply need to keep investing consistently.

When investors continue buying during market declines, they automatically purchase more units at lower prices each month. Once the market recovers, they will have already accumulated enough holdings to fully benefit from the upward trend.

This is not luck—it is simply how the DCA mechanism works: buy more when prices are low and less when prices are high.

“In a market where 95% of accounts belong to individual investors and sensitivity to short-term news is extremely high, persistence is not just a virtue—it can also create a long-term advantage,” Dragon Capital experts concluded.