4 ms·

There is plenty of empirical evidence showing that DCA doesn't work, and only provide a psychological value. Why are people still using it? And for Bitcoin?

ericb 9y ago
Sources?
- ccleve 9y ago
  https://www.google.com/search?q=dollar+cost+averaging+empirical+evidence&ie=utf-8&oe=utf-8 https://www.google.com/search?q=dollar+cost+averaging+empiri... Dollar cost averaging doesn't work because it makes an assumption that doesn't hold in the real world. It assumes that stocks trade in a range, and revert to a "true" price over time. If there were a true price, then you would in fact buy more when the price was low and less when it was high and DCA would work. But stock prices look more like a random walk, and they display no tendency to revert to a mean. Here's an article I just found: http://www.crossingwallstreet.com/archives/2010/11/dollar-cost-averaging-the-myth-that-wont-die.html http://www.crossingwallstreet.com/archives/2010/11/dollar-co...
- p4lindromica 9y ago
  The book A Random Walk Down Wall Street
- ucaetano 9y ago
  Besides all the actual sources that others provided, there's always the "proof by capitalism": if DCA made sense, institutional investors would use it and make more money. They don't use it.
thanatropism 9y ago
It says "Claude Shannon" on the tin. The amount of Claude Shannon worship in YC is astounding. Shannon basically lied (possibly to himself too) about AI for about 15 years from 1950 on.
- matt4077 9y ago
  Even after reading through Shannon's Wikipedia article, and searching it for "artificial intelligence" and "1950" I have no idea what you're talking about. It appears as if Shannon created a maze-solving robot mouse with memory, and also published the basic idea for computer chess around that time. Both ideas seem fundamentally sound. And even if he had somehow been wrong on something at that stage in his life, he had basically created the science of communication single-handedly long before. Plus some minor work in cryptography.

ericb 9y ago

Sources?

ccleve 9y ago
https://www.google.com/search?q=dollar+cost+averaging+empirical+evidence&ie=utf-8&oe=utf-8 https://www.google.com/search?q=dollar+cost+averaging+empiri... Dollar cost averaging doesn't work because it makes an assumption that doesn't hold in the real world. It assumes that stocks trade in a range, and revert to a "true" price over time. If there were a true price, then you would in fact buy more when the price was low and less when it was high and DCA would work. But stock prices look more like a random walk, and they display no tendency to revert to a mean. Here's an article I just found: http://www.crossingwallstreet.com/archives/2010/11/dollar-cost-averaging-the-myth-that-wont-die.html http://www.crossingwallstreet.com/archives/2010/11/dollar-co...
p4lindromica 9y ago
The book A Random Walk Down Wall Street
ucaetano 9y ago
Besides all the actual sources that others provided, there's always the "proof by capitalism": if DCA made sense, institutional investors would use it and make more money. They don't use it.

thanatropism 9y ago

It says "Claude Shannon" on the tin. The amount of Claude Shannon worship in YC is astounding. Shannon basically lied (possibly to himself too) about AI for about 15 years from 1950 on.

matt4077 9y ago
Even after reading through Shannon's Wikipedia article, and searching it for "artificial intelligence" and "1950" I have no idea what you're talking about. It appears as if Shannon created a maze-solving robot mouse with memory, and also published the basic idea for computer chess around that time. Both ideas seem fundamentally sound. And even if he had somehow been wrong on something at that stage in his life, he had basically created the science of communication single-handedly long before. Plus some minor work in cryptography.