Comments on: Dollar-Cost Averaging: For Higher Return or for Lower Risk? http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/ Fri, 20 Nov 2009 19:09:54 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: Benjamin Graham’s Three Principles of Value Investing http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-2/#comment-54382 Benjamin Graham’s Three Principles of Value Investing Fri, 27 Mar 2009 15:57:36 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-54382 [...] Dollar-cost averaging: With DCA, you buy a fixed dollar amount regularly, taking advantage of dips of the market without having to worry about when to get in and out of the market. Though DCA has its limitation in an up market, it is proven to be the winning method in the long term. [...] [...] Dollar-cost averaging: With DCA, you buy a fixed dollar amount regularly, taking advantage of dips of the market without having to worry about when to get in and out of the market. Though DCA has its limitation in an up market, it is proven to be the winning method in the long term. [...]

]]> By: Sun http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-42827 Sun Wed, 11 Jun 2008 01:38:54 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-42827 Chad: Right, DCA and index funds are slow, steady ways to build up investments. Though it seems DCA may not be such a good idea in the long-term, I am still using it to buy most of my funds. Then again, I also have a lot of active funds that I hope can generate better returns :) Chad: Right, DCA and index funds are slow, steady ways to build up investments. Though it seems DCA may not be such a good idea in the long-term, I am still using it to buy most of my funds. Then again, I also have a lot of active funds that I hope can generate better returns :)

]]> By: Chad @ Sentient Money http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-42823 Chad @ Sentient Money Tue, 10 Jun 2008 13:33:14 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-42823 I couldn't agree more. I don't use DCA and never will. I also don't use index funs or many funds at all. DCA and index funds are fine if you want to retire when you are 65, but I would prefer to have some real health left and shot for 10-15 years earlier. I couldn’t agree more. I don’t use DCA and never will. I also don’t use index funs or many funds at all. DCA and index funds are fine if you want to retire when you are 65, but I would prefer to have some real health left and shot for 10-15 years earlier.

]]> By: Hosting the Festival of Frugality Sunday Roundup | Personal Finance Blog by Money Ning http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-42775 Hosting the Festival of Frugality Sunday Roundup | Personal Finance Blog by Money Ning Sun, 08 Jun 2008 20:33:10 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-42775 [...] The Sun’s Financial Diary asks something quite interesting - Is dollar cost averaging for higher return or lower risk? [...] [...] The Sun’s Financial Diary asks something quite interesting – Is dollar cost averaging for higher return or lower risk? [...]

]]> By: The Worst “Timing” Ever http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-42751 The Worst “Timing” Ever Sat, 07 Jun 2008 03:41:44 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-42751 [...] I am not trying to time the market. Instead, I buy shares whether the market goes up or come down (dollar-cost averaging). This method has served us quite well over the years and I am very happy with the set-and-forget [...] [...] I am not trying to time the market. Instead, I buy shares whether the market goes up or come down (dollar-cost averaging). This method has served us quite well over the years and I am very happy with the set-and-forget [...]

]]> By: The Dividend Guy http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-24705 The Dividend Guy Fri, 05 Oct 2007 12:59:22 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-24705 Sun - thanks for the analysis. I appreciate seeing this and learned some things from it. The only other comment I would make is that often, we as investors try to over-analyze things and complicate things. At the end of the day, what will matter is that people are invested in a diversified portfolio and make regular contributions as money comes available. If faced with the choice of LS vs. DCA, then LS wins, but to keep things simple and easy, often a regular investment plan is just easier to do. Thanks again for the analysis! The Dividend Guy Sun – thanks for the analysis. I appreciate seeing this and learned some things from it.

The only other comment I would make is that often, we as investors try to over-analyze things and complicate things. At the end of the day, what will matter is that people are invested in a diversified portfolio and make regular contributions as money comes available. If faced with the choice of LS vs. DCA, then LS wins, but to keep things simple and easy, often a regular investment plan is just easier to do.

Thanks again for the analysis!

The Dividend Guy

]]> By: How Soon Can You Triple Your Money and How to Triple it? | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-6121 How Soon Can You Triple Your Money and How to Triple it? | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing Mon, 09 Apr 2007 16:40:38 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-6121 [...] Dollar-Cost-Averaging: For Higher Return or for Lower Risk? [...] [...] Dollar-Cost-Averaging: For Higher Return or for Lower Risk? [...]

]]> By: The Personal Finance Blog You Can Invest In - Money Blog Site Elite 8 » http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-4665 The Personal Finance Blog You Can Invest In - Money Blog Site Elite 8 » Wed, 21 Mar 2007 09:01:06 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-4665 [...] (16) Fire Finance vs. (7) The Sun’s Financial Dairy [...] [...] (16) Fire Finance vs. (7) The Sun’s Financial Dairy [...]

]]> By: The Latest On FMF’s March Madness And Other Blog Post Competitions » Silicon Valley Blog About Money http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-4389 The Latest On FMF’s March Madness And Other Blog Post Competitions » Silicon Valley Blog About Money Sat, 17 Mar 2007 15:01:50 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-4389 [...] Now on to Money Blog Site’s other post competition, where it seems like my submitted article How To Furnish Your House On Any Budget, Even For Free has made a little headway (also into the “Sweet Sixteen” round) and is now head to head against Sun’s cool post Dollar-Cost-Averaging: For Higher Return or for Lower Risk? [...] [...] Now on to Money Blog Site’s other post competition, where it seems like my submitted article How To Furnish Your House On Any Budget, Even For Free has made a little headway (also into the “Sweet Sixteen” round) and is now head to head against Sun’s cool post Dollar-Cost-Averaging: For Higher Return or for Lower Risk? [...]

]]> By: The Personal Finance Blog You Can Invest In - Money Blog Site Sweet Sixteen: Region 3 » http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-4329 The Personal Finance Blog You Can Invest In - Money Blog Site Sweet Sixteen: Region 3 » Fri, 16 Mar 2007 12:16:39 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-4329 [...] (6) The Digerati Life vs. (7) The Sun’s Financial Dairy [...] [...] (6) The Digerati Life vs. (7) The Sun’s Financial Dairy [...]

]]> By: Inclement http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-4230 Inclement Thu, 15 Mar 2007 04:00:15 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-4230 This quote from the footnote of the Knight, Mandell, 1993 paper cited above helped me: <blockquote>Thus, we take care not to confuse Dollar Cost Averaging with periodic investing where the investor puts aside a regular amount of savings each period to invest in risky securities. Periodic investment of savings as funds become available is a Buy and Hold strategy and has the additional positive attribute of encouraging habitual savings, a characteristic not shared by Dollar Cost Averaging.</blockquote> They define and analyze DCA as having all assets (say $100K) in a risk-less investment (T-bills) up front, and investing only small amounts each month for a holding period of 10 years until they reach their asset allocation target. That's not the same as <em>NOT</em> having all $100K up front and buying as you go. The paper says that Optimal Rebalancing produces the best results. You can achieve this with periodic investment by buying each month enough stocks, bonds, and cash so as to maintain your desired asset allocation (which is based on the risk you can tolerate). Since stocks will (most of the time) outpace bonds and cash, you may end up buying more of the latter each month. That's periodic investing + rebalancing in the real world. This quote from the footnote of the Knight, Mandell, 1993 paper cited above helped me:

Thus, we take care not to confuse Dollar Cost Averaging with periodic investing where the
investor puts aside a regular amount of savings each period to invest in risky securities. Periodic
investment of savings as funds become available is a Buy and Hold strategy and has the
additional positive attribute of encouraging habitual savings, a characteristic not shared by
Dollar Cost Averaging.

They define and analyze DCA as having all assets (say $100K) in a risk-less investment (T-bills) up front, and investing only small amounts each month for a holding period of 10 years until they reach their asset allocation target.

That’s not the same as NOT having all $100K up front and buying as you go. The paper says that Optimal Rebalancing produces the best results. You can achieve this with periodic investment by buying each month enough stocks, bonds, and cash so as to maintain your desired asset allocation (which is based on the risk you can tolerate). Since stocks will (most of the time) outpace bonds and cash, you may end up buying more of the latter each month.

That’s periodic investing + rebalancing in the real world.

]]> By: The Sun http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-3454 The Sun Wed, 28 Feb 2007 22:28:05 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-3454 Actually, as you said, the conclusion is to start investing as early as possible. The amount I used in the analysis is quite small ($100 a month, or $1200 a year), so it won't become a problem for people who want to invest. And in this case, $1200 shouldn't an amount that too difficult to come up with. If the fund is available, then making a lump sum investment at the beginning is better than putting $100 every month. On the other hand, if the money isn't available, then using DCA is a better choice than saving the money to invest. Of course, a lump sum at the beginning of the year works better in up markets, as we saw in the past 20 years. For the long-term, we should invest as early as we can and as much as we can. Actually, as you said, the conclusion is to start investing as early as possible. The amount I used in the analysis is quite small ($100 a month, or $1200 a year), so it won’t become a problem for people who want to invest. And in this case, $1200 shouldn’t an amount that too difficult to come up with. If the fund is available, then making a lump sum investment at the beginning is better than putting $100 every month. On the other hand, if the money isn’t available, then using DCA is a better choice than saving the money to invest. Of course, a lump sum at the beginning of the year works better in up markets, as we saw in the past 20 years. For the long-term, we should invest as early as we can and as much as we can.

]]> By: mike http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-3451 mike Wed, 28 Feb 2007 21:39:30 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-3451 Excellent analysis. But isn't the conclusion simply the result of investing as early as possible in a fund that rose in value 80% of the time (16 years out of 20)? DCA allows people with jobs and regular pay checks to do just that. Unless you can find some trust-fund baby to lend you all the money interest-free at the beginning of each year... Excellent analysis. But isn’t the conclusion simply the result of investing as early as possible in a fund that rose in value 80% of the time (16 years out of 20)? DCA allows people with jobs and regular pay checks to do just that. Unless you can find some trust-fund baby to lend you all the money interest-free at the beginning of each year…

]]> By: Free Money Finance http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-3448 Free Money Finance Wed, 28 Feb 2007 18:25:42 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-3448 <strong>Free Money Finance March Madness, Round 1, Posts 49-64...</strong> We're continuing with the first round of Free Money Finance March Madness (if you wonder what's going on in these posts, see my article announcing March Madness and/or click on my March Madness category link and scroll down to read... Free Money Finance March Madness, Round 1, Posts 49-64…

We’re continuing with the first round of Free Money Finance March Madness (if you wonder what’s going on in these posts, see my article announcing March Madness and/or click on my March Madness category link and scroll down to read…

]]> By: My Best - The Sun’s Financial Diary - Accumulating wealth is like building The Great Wall, one brick at a time http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-3352 My Best - The Sun’s Financial Diary - Accumulating wealth is like building The Great Wall, one brick at a time Sun, 25 Feb 2007 18:43:30 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-3352 [...] 423 posts I have written in the past six months is the best, I will have to say that I really like Dollar-Cost-Averaging: For Higher Return or for Lower Risk? and So How Bad is Dollar-Cost-Averaging? My Own Study of VFINX from 1988 - 2007. The reason is [...] [...] 423 posts I have written in the past six months is the best, I will have to say that I really like Dollar-Cost-Averaging: For Higher Return or for Lower Risk? and So How Bad is Dollar-Cost-Averaging? My Own Study of VFINX from 1988 – 2007. The reason is [...]

]]> By: Too Many Debts » Blog Archive » Welcome to the 83rd Carnival of Personal Finance! http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1723 Too Many Debts » Blog Archive » Welcome to the 83rd Carnival of Personal Finance! Wed, 24 Jan 2007 16:32:51 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1723 [...] The Sun’s Financial Diary presents some dollar cost averaging [...] [...] The Sun’s Financial Diary presents some dollar cost averaging [...]

]]> By: The Sun http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1595 The Sun Fri, 19 Jan 2007 03:57:49 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1595 Duane: I agree with you that for small investors, DCA makes more sense emotionally than financially as we all don't want to lose money in the short term. Though 20 or 30 years from now our worry may prove to be unnecessary, it's hard to see what it will be that far away. As you said, with DCA, we can develop a good habit of investing a small amount continuously without even trying to figure out what the market will be tomorrow. With that alone, we can sleep well in the evening. Duane: I agree with you that for small investors, DCA makes more sense emotionally than financially as we all don’t want to lose money in the short term. Though 20 or 30 years from now our worry may prove to be unnecessary, it’s hard to see what it will be that far away. As you said, with DCA, we can develop a good habit of investing a small amount continuously without even trying to figure out what the market will be tomorrow. With that alone, we can sleep well in the evening.

]]> By: A Better Way to Invest in 401(k) and Get Better Return? - The Sun’s Financial Diary - Accumulating wealth is like building The Great Wall, one brick at a time http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1585 A Better Way to Invest in 401(k) and Get Better Return? - The Sun’s Financial Diary - Accumulating wealth is like building The Great Wall, one brick at a time Thu, 18 Jan 2007 20:41:48 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1585 [...] Dollar-Cost-Averaging: For Higher Return or for Lower Risk? [...] [...] Dollar-Cost-Averaging: For Higher Return or for Lower Risk? [...]

]]> By: Duane Gran http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1532 Duane Gran Tue, 16 Jan 2007 17:55:04 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1532 My impression of DCA is that it is better thought of as a useful habit than an optimal investment strategy. Consider for a moment the alternative. We all know the advice from Buffet and his cohorts to be a contrary investor -- which means to buy when others are selling -- but it is emotionally taxing to throw a lump sum into the market when the popular press and your neighbor are all gloomy about investing. My impression of DCA is that it is better thought of as a useful habit than an optimal investment strategy. Consider for a moment the alternative. We all know the advice from Buffet and his cohorts to be a contrary investor — which means to buy when others are selling — but it is emotionally taxing to throw a lump sum into the market when the popular press and your neighbor are all gloomy about investing.

]]> By: The Sun http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1494 The Sun Mon, 15 Jan 2007 21:18:00 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1494 Liz: First about the time to do the comparison. The data I used were from January 1988 to January 2007 and returns I calculated were from January 1989 to January 2007, one year after the investments (1-month and 1-year plan) began. Since I only downloaded weekly data instead of daily (that would be too much to process), the first day of the current year is almost the same as the last day of the previous year. And because every plan used the same time frame, there shouldn't be a difference as far as the results are concerned. I agree with your conclusion one will be better served to start investing right away using DCA instead of saving the money and making a LS investment at the end of the year and that's the conclusion from my previous post where I compared 1-month DCA at the beginning of the year and 1-year LS at the end of the year and the 1-year LS scheme lagged quite significantly. Actually, in addition to the comparison between DCA and LS, one main conclusion I got is that we shouldn't delay investing for whatever reason, including "don't have enough fund for a lump sum investment." If that's the case, just use DCA. Liz: First about the time to do the comparison. The data I used were from January 1988 to January 2007 and returns I calculated were from January 1989 to January 2007, one year after the investments (1-month and 1-year plan) began. Since I only downloaded weekly data instead of daily (that would be too much to process), the first day of the current year is almost the same as the last day of the previous year. And because every plan used the same time frame, there shouldn’t be a difference as far as the results are concerned.

I agree with your conclusion one will be better served to start investing right away using DCA instead of saving the money and making a LS investment at the end of the year and that’s the conclusion from my previous post where I compared 1-month DCA at the beginning of the year and 1-year LS at the end of the year and the 1-year LS scheme lagged quite significantly. Actually, in addition to the comparison between DCA and LS, one main conclusion I got is that we shouldn’t delay investing for whatever reason, including “don’t have enough fund for a lump sum investment.” If that’s the case, just use DCA.

]]> By: Liz http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1441 Liz Sun, 14 Jan 2007 16:10:45 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1441 Dovetailing on Jeremy's comment: For most people, the true comparison is between DCA and LS at the end of the year, not DCA and LS at the beginning of the year. Assuming I intend to put aside 30% of my income towards investments, I do not have these funds available on January 1st, or even January 31st. In order to contribute LS, I would have to wait until 4th quarter to accrue the necessary funds. In this scenario, I am better served with DCA. However, if a significant portion of my income comes from a bonus paid early in the year, your analysis illustrates that I am best served by putting my bonus towards the 30% investment goal. Dovetailing on Jeremy’s comment: For most people, the true comparison is between DCA and LS at the end of the year, not DCA and LS at the beginning of the year. Assuming I intend to put aside 30% of my income towards investments, I do not have these funds available on January 1st, or even January 31st. In order to contribute LS, I would have to wait until 4th quarter to accrue the necessary funds. In this scenario, I am better served with DCA. However, if a significant portion of my income comes from a bonus paid early in the year, your analysis illustrates that I am best served by putting my bonus towards the 30% investment goal.

]]> By: links for 2007-01-13 » Personal Finance - Save Money at Binary Dollar http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1439 links for 2007-01-13 » Personal Finance - Save Money at Binary Dollar Sun, 14 Jan 2007 15:54:31 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1439 [...] Dollar-Cost-Averaging: For Higher Return or for Lower Risk? Sun does more studies to see if dollar-cost averaging is worth it. (tags: money finance investing) [...] [...] Dollar-Cost-Averaging: For Higher Return or for Lower Risk? Sun does more studies to see if dollar-cost averaging is worth it. (tags: money finance investing) [...]

]]> By: The Sunday Review #4 http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1435 The Sunday Review #4 Sun, 14 Jan 2007 10:39:49 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1435 [...] Dollar-cost-averaging: For Higher Return or For Lower Risk? [...] [...] Dollar-cost-averaging: For Higher Return or For Lower Risk? [...]

]]> By: mikealao http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1361 mikealao Fri, 12 Jan 2007 21:52:15 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1361 John R. Knight and Lewis Mandell, "Nobody Gains from Dollar Cost Averaging: Analytical, Numerical, and Empirical Results," Financial Services Review, 2(1) 1993, pp. 51-61. <b>"Our results strongly imply that the additional cost and effort associated with Dollar Cost Averaging cannot be justified for any investor, regardless of degree of risk aversion. With the possible exception of its promoters, nobody gains from Dollar Cost Averaging."</b> John R. Knight and Lewis Mandell, “Nobody Gains from Dollar Cost Averaging: Analytical, Numerical, and Empirical Results,” Financial Services Review, 2(1) 1993, pp. 51-61. “Our results strongly imply that the additional cost and effort associated with Dollar Cost Averaging cannot be justified for any investor, regardless of degree of risk aversion. With the possible exception of its promoters, nobody gains from Dollar Cost Averaging.”

]]> By: Jonathan http://www.thesunsfinancialdiary.com/investing/dollar-cost-averaging-for-higher-return-or-for-lower-risk/comment-page-1/#comment-1359 Jonathan Fri, 12 Jan 2007 20:29:32 +0000 http://www.thesunsfinancialdiary.com/2007/01/12/dollar-cost-averaging-for-higher-return-or-for-lower-risk/#comment-1359 I'm also using Firefox and it's telling me I'm not :) Hmm... those std dev numbers look really different between 1-month and 1-year. Once/If I find time this weekend I will do this too and we can compare numbers. Thanks for doing this by the way. I’m also using Firefox and it’s telling me I’m not :)

Hmm… those std dev numbers look really different between 1-month and 1-year. Once/If I find time this weekend I will do this too and we can compare numbers. Thanks for doing this by the way.

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