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Old 02-13-2008, 01:08 PM   #41
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I can't stop laughing about being "the guy on the internet". ...someone quoted Moshe Milevsky. Well Moshe also is a huge proponent of living benefits within a variable annuity. NOW how many on here will listen to whatever Moshe says?
I'll give your sentiments to Moshe when I see him TWO WEEKS from today........

Keep in mind in 2000 he was villified by the insurance industry, got death threats, etc, because he did NOT believe living benefits were worth the cost, or VAs for that matter.

Apparently he had a renaissance of thinking after 9/11, crunched a bunch of numbers, and now thinks insurers are not charging ENOUGH to arbitrage the risk of living benefits away.............

Hey, even the "experts" can change their mind..........
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Old 02-13-2008, 01:14 PM   #42
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If you get the chance, tell him you are thinking about investing in Uruguay and ask his opinion. He'll think you're a genius!
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Old 02-13-2008, 01:32 PM   #43
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If you get the chance, tell him you are thinking about investing in Uruguay and ask his opinion. He'll think you're a genius!
Why would I ask him that?
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Old 02-13-2008, 01:42 PM   #44
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There are so many purported "experts" on the internet. I guess I need to start my own website, make the same statement, and then people will believe me when I say it.
I can't stop laughing about being "the guy on the internet". ...someone quoted Moshe Milevsky. Well Moshe also is a huge proponent of living benefits within a variable annuity. NOW how many on here will listen to whatever Moshe says?
Art....

The problem is you are using one data point... which happens to be YOU... and for your one data point you are down...

The studies uses many data points... and the probability is that if you do a lump sum purchase it will be better than DCA. Now, what is that probability? I don't know...

But, using the poker analysis... would you fold on a full house? The probability is that you would win... but there are hands that can beat you... or, make it a straight flush... still a higher probability of you winning... but you can still lose... you are right.. a royal flush wins unless you have wild cards... then you got that 5 of a kind...

so... who will I believe.... well, both of you.... you have lost, but the 'better' bet is to do what you did... and years from now it will not be that much of a difference... like say... 10%...

Edit to remove something already there in another post...
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Old 02-13-2008, 01:51 PM   #45
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Why would I ask him that?
Because he will think you are a genius!

it was his tip to me, when I asked him for the next China.
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Old 02-13-2008, 01:59 PM   #46
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Art....

The problem is you are using one data point... which happens to be YOU... and for your one data point you are down...

The studies uses many data points... and the probability is that if you do a lump sum purchase it will be better than DCA. Now, what is that probability? I don't know...

But, using the poker analysis... would you fold on a full house? The probability is that you would win... but there are hands that can beat you... or, make it a straight flush... still a higher probability of you winning... but you can still lose... you are right.. a royal flush wins unless you have wild cards... then you got that 5 of a kind...

so... who will I believe.... well, both of you.... you have lost, but the 'better' bet is to do what you did... and years from now it will not be that much of a difference... like say... 10%...

Edit to remove something already there in another post...
Texas, while you may be correct about odds, the point I was trying to make was that it's more important (in my opinion) to lean toward investing based on whether or not you are more driven by fear or greed. The fact, that the odds were potentially on my side are of little value when down over 9% after a couple of months. I'm getting no satisfaction out of knowing the odds were slightly in my favor. I happen to be the type of investor who will give up a max return to lean towards safety. Now, if I felt the market were at a low, then I would consider more that the odds may more be in my favor and adjust my thinking accordingly.
I like your poker comparisons, so lets' stay with those. Consider I have a full house, but can see that the nine, ten, jack, and queen of diamonds are already showing on the table; now how much less must I consider towards the value of my full house? I may have the eight of diamonds in my hand, giving me a straight flush, but I still have to bet with the rationale that the king may be in the opponents hand.
My point being that using technical analysis is much like reading the odds of having the best hand on the poker table, however, unless I have the nuts, I've got to consider whether or not it's worth the risk to go all in.
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Old 02-13-2008, 02:14 PM   #47
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Texas, while you may be correct about odds, the point I was trying to make was that it's more important (in my opinion) to lean toward investing based on whether or not you are more driven by fear or greed. The fact, that the odds were potentially on my side are of little value when down over 9% after a couple of months. I'm getting no satisfaction out of knowing the odds were slightly in my favor. I happen to be the type of investor who will give up a max return to lean towards safety. Now, if I felt the market were at a low, then I would consider more that the odds may more be in my favor and adjust my thinking accordingly.
I like your poker comparisons, so lets' stay with those. Consider I have a full house, but can see that the nine, ten, jack, and queen of diamonds are already showing on the table; now how much less must I consider towards the value of my full house? I may have the eight of diamonds in my hand, giving me a straight flush, but I still have to bet with the rationale that the king may be in the opponents hand.
My point being that using technical analysis is much like reading the odds of having the best hand on the poker table, however, unless I have the nuts, I've got to consider whether or not it's worth the risk to go all in.
I gotta jump in here, because you crack me up. Why did you invest a couple months ago, when you state you use technical analysis to make calculated investment decisions? Certainly some of the indicators were showing some weaknesses, right??

On a serious note, the last quarter of any investment years can get choppy, with quarterly and yearly rebalancing, tax loss selling, capital gains being distributed by most mutual funds, etc. I for one wasn't geared up for anything but an "ok" 2008, certainly NOT like the market rebound years we have had.

If the general indexes move up 4-5% this year or so, I am good with that............
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Old 02-13-2008, 02:22 PM   #48
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I gotta jump in here, because you crack me up. Why did you invest a couple months ago, when you state you use technical analysis to make calculated investment decisions? Certainly some of the indicators were showing some weaknesses, right??

On a serious note, the last quarter of any investment years can get choppy, with quarterly and yearly rebalancing, tax loss selling, capital gains being distributed by most mutual funds, etc. I for one wasn't geared up for anything but an "ok" 2008, certainly NOT like the market rebound years we have had.

If the general indexes move up 4-5% this year or so, I am good with that............
Fair questions. And here's the reason, I was moving money out of (what I considered) more risky investments into a variable annuity because I felt we were due for a major correction. However, this particular company did not allow for dollar cost averaging or else I most definitely would have. So, while I have locked in my future income for life, I am now starting off over $9k in the hole.
So sure, the market may bounce back, but I am now that much further from getting a raise in income.
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Old 02-13-2008, 03:21 PM   #49
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Fair questions. And here's the reason, I was moving money out of (what I considered) more risky investments into a variable annuity because I felt we were due for a major correction. However, this particular company did not allow for dollar cost averaging or else I most definitely would have. So, while I have locked in my future income for life, I am now starting off over $9k in the hole.
So sure, the market may bounce back, but I am now that much further from getting a raise in income.
Well there's time to make that up.........like today..........
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Old 02-13-2008, 03:55 PM   #50
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Well there's time to make that up.........like today..........
True enough.
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Old 02-20-2008, 11:30 AM   #51
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Which means that DCA is not worth doing if we are talking long periods.........
I had breakfast this morning with Dr. Quincy Krosby, and DCA came up in conversation. Her statement was that you should absolutely be DCA'ing into the market. She stated that ALL institutional investors DCA into the market, and she thought it was crucial or else risk missing the benefits of key moves in the market.
Just thought I'd pass it along.
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Old 02-20-2008, 12:31 PM   #52
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Institutional investors DCA because they are big enough that they can move the market. Most individual investors don't have that concern.

Art, don't knock doing what gives the best odds. In the end that's all we can do as investors is get ourselves into the situation where the odds are most in our favor. Many of us believe asset allocation is the way to do that. But once you have gotten yourself into that situation, you have to be willing to accept whatever happens. Wanting more safety and control is exactly the fear and greed that you talked about wanting to avoid.
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Old 02-20-2008, 12:35 PM   #53
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free, if you wanted to move the market you wouldn't be DCA'ing. You'd want to lump sum in and make a mark.
You say the odds are with not DCA'ing, and I disagree. Nothing wrong with asset allocation and I certainly don't see the two as mutually exclusive.
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Old 02-20-2008, 12:38 PM   #54
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If an institutional investor moved the market that would be a bad thing for them, which is why they use DCA.
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Old 02-20-2008, 12:58 PM   #55
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Anyway, now I have a lump sum and I want to invest based upon Modern Portfolio Theory. I am thinking of the Coffeehouse Model. Set it and forget it. About 40% fixed income, the rest stocks, in ETF's and MF's

The question is, when do I start buying in, using dollar cost averaging?

I am thinking about starting to get some Inflation-Protected Securities now, because of inflationary pressure, and wait a little while to buy stock ETF's. I don't think we've hit bottom, although I know I'm market timing a little, here.
Amy, like you I'm dealing with a lump sum. In my case, I received about 2/3 of it on February 13th and the rest should arrive this spring.

I have put a large amount in Wellesley VWIAX right off the bat; it is over 61% bonds and doesn't vary much, so I have no problems with doing that.

And for what it's worth, as another part of my investment plan I am moving an equally large amount into a small number of Vanguard equity index funds more gradually, over 4-5 months (on the 14th of each month, Feb-June).

I do think that higher risk is likely to give you higher reward, as several here have pointed out. Still, we each have to determine what sort of risk will allow us to sleep at night, and I think that individuals differ on that.

I have no crystal ball telling me what the market will do. I would never know until later, if I was buying equity funds on the best or worst day possible from an investment standpoint. If I bought all of my equity funds on the worst day possible, I would stress out about it and chastise myself endlessly for years. If instead, I buy on five different dates, I have five times as great a chance of hitting the worst day possible - - but I would only be buying 20% my equity funds on that day. I can live with that a lot easier.

I see no need for me to rush into this, though I do want to be fully invested to the extent of my plan by mid-June. Meanwhile, the remainder of the lump sum will be earning interest in Vanguard's Prime Money Market fund VMMXX.

I am definitely NOT saying that everyone should DCA instead of investing the entire lump sum immediately, just because I did so with one portion of my lump sum. I am just saying that for me, as an individual and knowing my own tolerance for stress and risk, I know I have made the right decision. Individuals are different and we need to keep that in mind. This is not necessarily a "one size fits all" decision for the individual investor.
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Old 02-20-2008, 01:08 PM   #56
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If an institutional investor moved the market that would be a bad thing for them, which is why they use DCA.
Well I can only share with you what I got directly from a chief investment strategist.
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Old 02-20-2008, 01:08 PM   #57
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Art, don't knock doing what gives the best odds. In the end that's all we can do as investors is get ourselves into the situation where the odds are most in our favor. Many of us believe asset allocation is the way to do that. But once you have gotten yourself into that situation, you have to be willing to accept whatever happens.
There is a problem with this reasoning. We use asset allocation because we are not sure which asset classes will outperform, and which will underperform in a given time frame,though all the classes that we choose have positive expectations over a longer timeframe. A good idea.

We also could apply this same reasoning to diversifying over time. We are not sure when our chosen classes will be going up, when they will be going down. although we assume that they will go up more than go down overa longer time period. This uncertainty seems to suggest that DCA is a good idea, in that it diversifies time based risk exposure, just like asset class investing diversifies asset class exposure.



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Old 02-20-2008, 01:17 PM   #58
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There is a problem with this reasoning. We use asset allocation because we are not sure which asset classes will outperform, and which will underperform in a given time frame,though all the classes that we choose have positive expectations over a longer timeframe. A good idea.

We also could apply this same reasoning to diversifying over time. We are not sure when our chosen classes will be going up, when they will be going down. although we assume that they will go up more than go down overa longer time period. This uncertainty seems to suggest that DCA is a good idea, in that it diversifies time based risk exposure, just like asset class investing diversifies asset class exposure.



Ha
A LOT of folks have DCA going on all the time, into their 401K. So on an OVERALL analysis, what is wrong with a lump sum when they are looking to do something outside? They are in effect doing both, which couldbe construed as the best of both worlds........

There was a study back in 2004 that said 13% of all folks STOPPED doing any 401K contributions in the period 2000-2003, another 15% LOWERED their contribution, and the majority stayed the course and kept pouring the money in............
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Old 02-20-2008, 01:32 PM   #59
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A LOT of folks have DCA going on all the time, into their 401K. So on an OVERALL analysis, what is wrong with a lump sum when they are looking to do something outside? They are in effect doing both, which couldbe construed as the best of both worlds........
This may be true. I don't remember whether this applies to the OP. Also, it really doesn't change my point; more it makes a case, and possibly a good one, for a special case were the lump sum is not large relative to regularly recurring flows.

Also, I am not saying anything is wrong with anything anyone wants to do. I don't care if your pleasure is to wait until a class is making new highs, and then decide that this is exactly the asset class that you need to add, right now. I remember a flurry of interest in REITs 18 months or so ago, when a lot of posters suddenly discovered that this was a class they really should have. Not much being said about REITs now, after 30-45% losses. I have no idea whether REITs would now be a good or bad investment, but someone bit by the REIT bug 18 months ago might wish that he had DCA'd into them rather than taking a nice big slice then.

No sense trying to stop the tides; no sense trying to stop human nature.

I am just making an abstract intellectual argument for people to use or refuse as they see fit. However, my recent experiences on this board should have shown me that for many it is hard to get away from should, and also that abstract arguments tend to hold little interest for many of us.

Ha
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Old 02-20-2008, 01:59 PM   #60
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haha....I couldn't agree more.
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