Comments on: Volatility and Market Fluctuations are Great for Retail Investors http://investing-school.com/lessons/volatility-and-market-fluctuations-are-great-for-retail-investors/ To Learn as Much as We Can About The Complicated Subject of Investing! Fri, 12 Mar 2010 06:31:47 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Ethan http://investing-school.com/lessons/volatility-and-market-fluctuations-are-great-for-retail-investors/comment-page-1/#comment-4827 Ethan Wed, 20 May 2009 15:00:38 +0000 http://investing-school.com/?p=513#comment-4827 Technically this might not be dollar-cost-averaging. DCA is what you do when you have a lump sum and decide to buy into the market slowly rather than invest it all at once. While somewhat more conservative, on average this is a losing move. Buying in today is better than buying in tomorrow, on average. Unless you are highly concerned about the market's immediate future, it's not necessarily a great idea. Instead your two examples were probably exercising automatic investing - investing new wealth as they earned it and without regard for market direction. That is a *great* idea and brings about good results over the long term. There's a lot of data out there about how DCA is a bad idea, but it's all based on the notion that you have a choice to invest today, but decide to spread it out instead. Technically this might not be dollar-cost-averaging. DCA is what you do when you have a lump sum and decide to buy into the market slowly rather than invest it all at once. While somewhat more conservative, on average this is a losing move. Buying in today is better than buying in tomorrow, on average. Unless you are highly concerned about the market’s immediate future, it’s not necessarily a great idea.

Instead your two examples were probably exercising automatic investing – investing new wealth as they earned it and without regard for market direction. That is a *great* idea and brings about good results over the long term. There’s a lot of data out there about how DCA is a bad idea, but it’s all based on the notion that you have a choice to invest today, but decide to spread it out instead.

]]> By: Ross http://investing-school.com/lessons/volatility-and-market-fluctuations-are-great-for-retail-investors/comment-page-1/#comment-4781 Ross Tue, 19 May 2009 18:27:31 +0000 http://investing-school.com/?p=513#comment-4781 Great post! I wish people would just stop taking money out AFTER the market crashes and buy them back AFTER the market does well. Sigh. Hopefully they will learn some day. Great post! I wish people would just stop taking money out AFTER the market crashes and buy them back AFTER the market does well. Sigh. Hopefully they will learn some day.

]]> By: ObliviousInvestor http://investing-school.com/lessons/volatility-and-market-fluctuations-are-great-for-retail-investors/comment-page-1/#comment-4778 ObliviousInvestor Tue, 19 May 2009 16:39:46 +0000 http://investing-school.com/?p=513#comment-4778 Excellent points! DCA'ing downward into an individual stock is a risky proposition. DCA'ing downward into a broadly-diversified index fund is far less scary. :) Excellent points! DCA’ing downward into an individual stock is a risky proposition. DCA’ing downward into a broadly-diversified index fund is far less scary. :)

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