Comments on: How I’m Using Dollar Cost Averaging – For Better Or For Worse http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/ Simple, applicable personal finance advice for the modern world Sun, 22 Nov 2009 01:08:33 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: rodgerlvu http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/comment-page-1/#comment-663022 rodgerlvu Fri, 15 May 2009 06:10:34 +0000 http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/#comment-663022 thanks for your post.. thanks for your post..

]]> By: Dan http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/comment-page-1/#comment-2282 Dan Mon, 01 Jan 2007 14:58:57 +0000 http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/#comment-2282 You need to read <i><a href="http://www.amazon.com/gp/reader/0471295639/ref=sib_dp_pt/102-2280099-7786527#reader-link" rel="nofollow">Against the Gods: the remarkable story of Risk</a></i> by Peter Bernstein. This book is about the history of probability theory, the insurance industry and the stock market. The smartest mathematicians and economists in the world keep getting closer, but making huge mistakes. You can't predict the market, you can only look at what has happened in the past, and try to hedge. The simple bottom line is buy low and sell high, but that's the opposite of personal behavior: when your mutual fund starts to go low, many people want to sell it and when it goes higher, many people want to buy more. Dollar cost averaging is buying low and buying fewer high. It's a smart way to invest, you're doing the right thing. You need to read Against the Gods: the remarkable story of Risk by Peter Bernstein. This book is about the history of probability theory, the insurance industry and the stock market. The smartest mathematicians and economists in the world keep getting closer, but making huge mistakes. You can’t predict the market, you can only look at what has happened in the past, and try to hedge.

The simple bottom line is buy low and sell high, but that’s the opposite of personal behavior: when your mutual fund starts to go low, many people want to sell it and when it goes higher, many people want to buy more. Dollar cost averaging is buying low and buying fewer high. It’s a smart way to invest, you’re doing the right thing.

]]> By: ruthie http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/comment-page-1/#comment-2178 ruthie Sun, 31 Dec 2006 08:22:21 +0000 http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/#comment-2178 The cat's banana? (Sorry, couldn't resist) The cat’s banana?

(Sorry, couldn’t resist)

]]> By: Jim Lippard http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/comment-page-1/#comment-2168 Jim Lippard Sun, 31 Dec 2006 00:39:09 +0000 http://www.thesimpledollar.com/2006/12/30/how-im-using-dollar-cost-averaging-for-better-or-for-worse/#comment-2168 If you have cash on hand, it's generally better to invest it all at once rather than dollar-cost averaging. If you're investing it as you get it, though, that's good. John Allen Paulos' book, _A Mathematician Plays the Stock Market_, gives an analysis with these conclusions. I've not read it, but Ben Stein and Phil DeMuth wrote a book called _Yes, You Can Time the Market_ which suggests a variant of dollar-cost averaging, using the 15-year moving average of various indicators to determine whether or not to invest (in an S&P index fund) in any given month. From what I've read, I think their strategy suffers from the usual problems of back-testing, and is not likely to be more effective going forward than dollar-cost averaging. I recommend Burton Malkiel's _A Random Walk Down Wall Street_ and Paulos' book over Stein and DeMuth's. If you have cash on hand, it’s generally better to invest it all at once rather than dollar-cost averaging. If you’re investing it as you get it, though, that’s good. John Allen Paulos’ book, _A Mathematician Plays the Stock Market_, gives an analysis with these conclusions.

I’ve not read it, but Ben Stein and Phil DeMuth wrote a book called _Yes, You Can Time the Market_ which suggests a variant of dollar-cost averaging, using the 15-year moving average of various indicators to determine whether or not to invest (in an S&P index fund) in any given month. From what I’ve read, I think their strategy suffers from the usual problems of back-testing, and is not likely to be more effective going forward than dollar-cost averaging.

I recommend Burton Malkiel’s _A Random Walk Down Wall Street_ and Paulos’ book over Stein and DeMuth’s.

]]>