Re:Fred Wilson: The Buy and Hold Mindset
by patrick451 on Tuesday November 29, 2022 @02:20AM
(#33784603)
I've seen this advice all over too, but it's never accompanied by anything approximating a mathematical proof. IMO, the burden of proof is on showing DCA works, not the other way around. In any case, the problem with your analogy is that if you have no information about that sin wave, you're equally likely to be investing at a local minimum.
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Re:Fred Wilson: The Buy and Hold Mindset
by Nursie on Tuesday November 29, 2022 @03:08AM
(#33784878)
> you're equally likely to be investing at a local minimum.
If you invest at a few different times, whether fixed interval or random, is this not increasing the probability of approach an average value over the period you're investing?
I'm not asserting it's a good idea, I'm not using it as a strategy myself (or in fact making investment choices myself at all really), I'm just interested from the technical perspective.
Re:Fred Wilson: The Buy and Hold Mindset
by DelaneyM on Tuesday November 29, 2022 @12:37PM
(#33790613)
> If you invest at a few different times, whether fixed interval or random, is this not increasing the probability of approach an average value over the period you're investing?
It does indeed increase the probability that you will approach the average value over that period.
But there's no reason to believe that average will be lower than the current value.