Yeah? got a bonus a few months back that I’ve been sitting on. No real need for it other than to beef up the portfolio. Still DCAing my regular income.
Just use it for a quick glance at the news. Not financial advice. I’m as boring as can be and having everything in Voo.
Also the proliferation of people misusing dollar cost averaging that seems to have originated in crypto spaces makes me irrationally irritated.
absolutely does. Mostly trying to sandbag until January to load up the Roth with VGT. I’m too heavy in pre tax and taxable brokerage for my liking.
this is pretty noisy metric tbh 1- its priced in USD, so the 2000/08 comparisons are dumb when the options market is 10x $ size from prior cycles 2-40% of the options are same day expiry now (compared to 10% 2019, 20% in 2020), so their extended impact on positioning is more neutered than people are making it out to be
My big takeaway was that people are still gambling with lots of money. Thanks for providing additional context. Value
I’m more confused now. You’re saying contributing to a 401k every pay period isn’t dollar cost averaging? Or my static (based on my salary) weekly contribution to betterment?
So people investing a specific amount at a regular interval that just so happens to coincide with when they get paid isn't DCA?
Investing weekly/biweekly is still DCAing. You could not invest that money, save it, and then do a lump sum.
It's not. Dca is a mechanism to decrease volatility(bad logic) by choosing to invest capital not as it's received but at intervals. Investing the amount of capital you have at your disposal as it's received is just investing. If I have 100k to invest and invest 1k a day that is dca. Investing 10% of a paycheck as received is not.
Isn’t investing the same amount to the same investments on a regular schedule the literal definition of DCA?
Lyrtch you're either wrong or the difference is so minimal in the definition you're talking about and the way people use it that wooo boy, that's some sort of pedantry that I thought previously impossible. And I've posted on this board since 2009.
I choose to invest in my Roth IRA once a month and invest in the same investments generally. I could do it all at once but I choose to do it once a month to "dollar cost average" and it also coincides with a paycheck don't @ me
its a two component strategy, temporal and capital the way you wrote is just a temporal investing strategy, maintaining a balance of excess capital that you intend to invest but delay to "average the share cost basis" is DCA'ing. in a literal sense you aren't averaging anything if you don't have the capital to invest so "just investing on fixed time thresholds that coincide with capital infusions" makes no sense as averaging anything. that wiki even outlines that it's an emotional hedge against volatility and a -ev investing strategy
my first post literally said I have an irrationally strong reaction to how the term is now used colloquially! i admitted this up front.
But it's not even that different because people could choose to invest in different securities as they get a capital infusion. Investing in the same security is what makes it limit volatility.
you can't "average" in an investment strategy if you don't have the choice to DEPLOY THE CAPITAL up front
The point of dollar cost averaging is to limit volatility by investing in the same security at regular intervals over a period of time. That's the literal definition.
because what you're investing in is irrelevant to the strategy its an emotional hedge play, that's it
Wrong.gif Dollar-cost averaging involves investing the same amount of money in a target security at regular intervals over a certain period of time, regardless of price. By using dollar-cost averaging, investors may lower their average cost per share and reduce the impact of volatility on the their portfolios. https://www.investopedia.com/terms/d/dollarcostaveraging.asp
explain to me what exactly you're averaging by investing a fixed amount of your income at regular intervals as the capital is received. by this frame you don't have a choice to invest it all up front at that price so you're just investing as capital as received. you can't average something if you don't have the option. again, the DCA acolyte copium is incredible, they want to have it both ways where they say it's a "value" play when it's literally just investing as capital as received (the correct way to invest) OR the definition that makes sense that is as an emotional hedge against volatility by carrying excess capital over a time period and investing it gradually to decrease perceived volatility. it fundamentally can not be both.
per the article listed the term was coined by someone arguing that the goal is to invest broadly as over time the market increases in size you're just decreasing the odds of "mis-timing" an investment which is in fact trying to time the market itself
by this formulation its just investing as you have capital available there's literally nothing novel or requiring an acronym for this. it also fundamentally doesn't make sense, you aren't CHOOSING to average your cost basis, it's just a function of capital availability.