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Originally Posted by haha
I cannot understand the negative take on diversification-over- time from some posters here. Why would diversification over asset classes and securities be important, but not diversification over time?
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Because in many cases they are mutually exclusive.
If I get a lump sum payment from an inheritance, business sale, house sale, whatever, suddenly I am very heavy in cash. My choice is to immediately try to get to whatever asset distribution I want to have, which means lump sum buying, or DCA'ing my purchases, which means it takes much longer to get to the asset mix I want.
My own preference is to get to the asset mix I want as quickly as possible. If I have an asset distribution that I think is ideal to manage risk while optomizing return, I want to get to that point right away rather than drag along as some less than ideal mix.
This is very much along the strategy of using DCA with your monthly investments. Rather than build up cash to buy in bulk, which will leave you heavy in cash until then, you continually purchase and keep your asset mix roughly in balance.
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