Originally Posted by toofrugalformycat
I'm easing into rebalancing, because I do not have the guts (or faith) to buy such a huge chunk of equities all at once.
I've been buying a little bit once a week, on the same day each week.
But now I wonder if it's a good or bad idea to always buy on the same day. Does the market end down more often on Fridays than Mondays, for example?
I remember reading a study somewhere that the phases of the moon had a measurable effect on investing.
Has anyone seen such a study on days of the week? Or am I just overanalyzing a totally random decision?
Let the ridicule begin.
Some people believe that there is a Monday effect - that the market tends to go down more on Mondays than other days - and that therefore it should be a good day to DCA into the market.
The idea is that during the week everyone is to busy working to pay much attention to the market or to the rest of the world but we all go home on Friday and watch the evening news over the weekend (or pull it off the internet) and find out how bad everything is and decide to sell and Monday is the first opportunity to do that so the market tends to go down on that day.
I read a book once by an academic type where he statistically analyzed a lot of these sort of market inefficiencies and tried to determine if there really is an effect and if so can it be exploited. (Sorry don't remember the author or the name of the book.)
IRRC his conclusion was that there was some evidence for a Monday effect but that it was to small to exploit. But IRRC he seemed to conclude that on most market inefficiencies. (Of course if he did find one that he could exploit he probably would have forgot about the book and started a hedge fund.)
I'm basically an efficient market, index fund type but I dollar cost average in to my after tax funds on Mondays just on the off chance that there is an effect. If there is great, I'll have a bit more money than I would otherwise and if not I'm probably no worse off than I would be by doing it on some other day.
Now will this help you? Probably not I suspect unless you have a very large sample size, i.e. do you rebalancing over a very large number of weeks because otherwise the effect will be dominated by the noise.