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Old 11-11-2008, 12:22 PM   #21
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I would appreciate your mathematical analysis that shows the superiority of DCAing a lump sum.

I think the DCA advantage is very clear, but that it is entirely psychological.

I don't read widely, but I do not remember seeing anyone on this board cite academic evidence that DCA is a superior deployment of a lump sum.

Furthermore, I do not believe that we all knew pretty clearly that a bear market was happening in 2007- else why didn't we all sell out?
ha

Agreed..... any study that I have read shows that lump sum is 'better' (there are more positive outcomes than negative outcomes) vs DCA... and one of the problems is that nobody actually defines what is DCA... I mean so that it can be studied... is it putting in every day, week, month, quarter, year? Do you put equal installments? Do you slow down you investments in a down market and speed them up in an up market?


My question is do you think that the economy is fundamentally different than it was a couple of years ago? If not, then this will pass and stocks are cheap.... if you think that a lot of the econmy has been destroyed and will not come back anytime soon... then I would not invest in stocks at all.... just my view...
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Old 11-11-2008, 12:29 PM   #22
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My question is do you think that the economy is fundamentally different than it was a couple of years ago?
In some important ways, yes. The world is about to find out how much "wealth" was created through the application of leverage. Some of that "wealth" will not return, at least not quickly.

But over the longer term I have faith that the economy will adapt, and grow. Notwithstanding the challenges we face currently, the world still seems to me a more agreeable place for investors than was true for many, many, periods during the past 100 years.
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Old 11-11-2008, 12:52 PM   #23
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In some important ways, yes. The world is about to find out how much "wealth" was created through the application of leverage. Some of that "wealth" will not return, at least not quickly.

But over the longer term I have faith that the economy will adapt, and grow. Notwithstanding the challenges we face currently, the world still seems to me a more agreeable place for investors than was true for many, many, periods during the past 100 years.
Maybe I should say it different.... since I was not quite referring to the market but the 'main street' economy... we are still going to buy hard goods at some point in time... washer/dryers, cars, etc. etc... maybe not this month or next (or the next 12), but has main street changed so much that we will be different? We will consume less as a country in the long term?

I don't think we have... and companies that survive will be making money... the question is who survives...
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Old 11-11-2008, 12:57 PM   #24
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We will consume less as a country in the long term?...
I think the only way that happens is a resource squeeze. Current commodity quotes suggest that is not high on the list of public concerns.

Ha
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Old 11-11-2008, 01:02 PM   #25
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I think the only way that happens is a resource squeeze. Current commodity quotes suggest that is not high on the list of public concerns.

Ha
I would also include either the availability of credit or the necessity for increased savings as potential resources that could squeeze out some of the consumption we've come to see as our birth right.
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Old 11-11-2008, 02:02 PM   #26
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We will consume less as a country in the long term?
...
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Current commodity quotes suggest that is not high on the list of public concerns.
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I would also include either the availability of credit or the necessity for increased savings as potential resources that could squeeze out some of the consumption we've come to see as our birth right.
I suspect that American consumption will rebound, but not to the level of past years, due to credit limits. On the other hand, the 3rd world countries will learn to produce for their own use.

Last year, I read anecdotes of Chinese families scrimping to save 50%, and freezing their lifestyles to the level prior to their industrialization. The reason was simply that the economic hardship that they endured under their totalitarian economic regime was still fresh in their mind. Their government had also abrogated the promise of economic security for the old, forcing them to save for their future. I would think the younger Chinese would want some more comforts of life than their seniors.

I have been watching commodities producer stocks to try to ride their rebound.
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