A Statistical Comparison of Value Averaging vs. Dollar Cost Averaging and Random Investment Techniques
نویسنده
چکیده
As the title suggests, this paper compares two “formula” or mechanical investment techniques, dollar cost averaging and a relatively new proposal, value averaging, to a form of random investing to determine if any technique yields superior investment performance. Results indicate that value averaging does provide superior expected investment returns when investment prices are quite volatile and over extended investment time horizons with little or no increase in risk. These results are quite surprising based on other research supporting the Efficient Market Hypothesis and the fact that any actual performance attributed to value averaging does not result from any temporary inefficiency in market prices.
منابع مشابه
Dollar-cost averaging may not be rational behavior, but it is perfectly normal behavio1:
I nvestors with cash that is destined for stocks often use a dollar-cost averaging plan. They divide the cash into segments, and convert one segment at a time from cash to stocks according to a predetermined schedule. The alternative to dollar-cost averaging is lump-sum investment. The popularity of dollar-cost averaging can be traced back at least to the 1940s. (See, for example, discussions i...
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