Happy Girl
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Is now the right time to buy into the stock market with recent share prices dropping so dramatically. Or is it as straightforward as buying when share prices are low
Is now the right time to buy into the stock market with recent share prices dropping so dramatically. Or is it as straightforward as buying when share prices are low
Now is a better time than last week.Is now the right time to buy into the stock market with recent share prices dropping so dramatically. Or is it as straightforward as buying when share prices are low
Is now the right time to buy into the stock market with recent share prices dropping so dramatically.
Remember what Mark Twain said about March - this is one of the peculiarly dangerous months in which to speculate in stocks. The others are July, January, September, April, November, May, October, June, December, August, and February.
DCA is fair enough if the thought of buying near a top is keeping one awake at night, but it's worth noting that there's a ton of academic research which shows that returns via a DCA approach are almost invariably worse than investing a lump sum.
Not necessarily. Just because prices are lower this week than last doesn't necessarily mean that they are better value or that returns are likely to be better into the future.Now is a better time than last week.
The parent poster didn't claim that. If you are buying a stock then surely your initial investment will return a larger gain if you buy after their price has been depressed.Not necessarily. Just because prices are lower this week than last doesn't necessarily mean that they are better value or that returns are likely to be better into the future.
Not necessarily. Just because prices are lower this week than last doesn't necessarily mean that they are better value or that returns are likely to be better into the future.
red joker..you cant guarantee anything. Are you God?
Could you be more specific about the conditions where this would hold? I can accept that sticking 100k cash under the mattress and buying 5k of stock each year for 20 years would perform more poorly than investing the 100k at the start of the period. However I would also imagine that saving up your money over a period of 20 years until you have a 100k lump sum to invest would perform more poorly than investing 5k at the end of each year. And in between there is a whole range of situations many of which will show a significant reduction in volatility without adversely affecting growth by using DCA.DCA is fair enough if the thought of buying near a top is keeping one awake at night, but it's worth noting that there's a ton of academic research which shows that returns via a DCA approach are almost invariably worse than investing a lump sum.
Could you be more specific about the conditions where this would hold? I can accept that sticking 100k cash under the mattress and buying 5k of stock each year for 20 years would perform more poorly than investing the 100k at the start of the period. However I would also imagine that saving up your money over a period of 20 years until you have a 100k lump sum to invest would perform more poorly than investing 5k at the end of each year. And in between there is a whole range of situations many of which will show a significant reduction in volatility without adversely affecting growth by using DCA.
In other words, I don't accept that "returns via a DCA approach are almost invariably worse than investing a lump sum". I think that under some conditions (like the example I gave above), it may be true. However I believe under many cases, it would be false especially as most people get their wealth through income.
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