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Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt

Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/ https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

mberning 4y ago
Buy all the time. Only reliable way to win.
- slaw 4y ago
  Past performance is not indicative of future results. Japan stock market JP225 didn't recover yet from 1990 crash.
  - rubidium 4y ago
    Yea so buy land if you’re so paranoid about becoming Japan. It’s an island nation with a very unique history. Not a great counterpoint to current US and global economics.
    - argomo 4y ago
      As the saying goes, there are four types of economies: developed, undeveloped, Argentina, and Japan.
      - hanniabu 4y ago
        Why Argentina?
        astrange 4y ago
        Argentina's economy is a series of endless crises from the government choosing the worst possible ways to intervene in it at every opportunity. Like a reverse South Korea.
    - scrivna 4y ago
      The UK is at more or less the same price as it was in 2000. France same as 2008. Meanwhile SPY is up 2.75x in that period. The US seems to be the anomaly. Value doesn’t always go higher. Maybe the USA is special, maybe not.
      - digitalnatives 4y ago
        SPY is differently weighted than for example FTSE. Most indexes do not factor in dividends, if you look at the total return data where dividends are reinvested you will see there are gains in Europe, but less than the US.
        scrivna 4y ago
        Thanks, I hadn’t realised the “obvious” indexes were measuring different things
      - lordnacho 4y ago
        Is that with dividends? Watch out because the German DAX actually does have reinvestment in it iirc. Most of the others don't.
        qznc 4y ago
        An index never includes dividends. An index fond might (accumulating) or might not (distributing).
        lordnacho 4y ago
        https://personal-financial.com/2020/11/27/the-dax-and-its-dividend-trick/ https://personal-financial.com/2020/11/27/the-dax-and-its-di...
        qznc 4y ago
        Thanks. Learned something today.
      - 4y ago
    - rwmj 4y ago
      Buying land in Japan isn't a great idea (except to live on it). You have to pay a hefty annual tax on it. Land even with property on it is so often abandoned they have a word for it and many marketplaces where you can buy abandoned land from the tax office.
  - astrange 4y ago
    Do Japanese people have to buy Japanese stocks just because it's the same country?
    - SapporoChris 4y ago
      No, Japanese can invest in other markets using international brokers. I don't know details on the fees and currency conversions. Investing in a foreign exchange is always at a slight disadvantage because of currency conversions and fees. For a US centric view: https://www.investopedia.com/articles/investing/032615/how-trade-foreign-stocks.asp https://www.investopedia.com/articles/investing/032615/how-t...
      - id 4y ago
        US stocks are traded on foreign exchanges. Even if you insist on buying on a US exchange, the currency conversion is not very expensive. If you're a buy and hold investor, it won't matter at all.
    - tasuki 4y ago
      And yet you often see US people recommending to buy US stocks. There are risks and benefits to buying both domestic and international stocks.
  - christophilus 4y ago
    If you invested only in the Nikkei on the way up and on the way down, you still came out fine. The only person who didn’t is the person who put all of their savings in at the very top and never bought again.
DantesKite 4y ago
Damn thanks for the great read. This is just what I was looking for.
qznc 4y ago
There is an inverse question: If you have a cash windfall you want to invest, all-at-once or split it up? I have seen a similar analysis (but can’t find it right now). Even if you invest at the all time highs, so the market drops right after you buy, you still win with the all-at-once strategy. The general lesson: Get your money into the market as soon as possible. Maybe more memorable: Time in the market beats timing the market.
- layer8 4y ago
  Investing in the stock market has the general assumption that, a priori, stocks are more likely to rise than to fall at any given point in time. Under that assumption, the all-at-once strategy has the better expected outcome. Of course, you can be unlucky and end up buying the all-time-high just before a crash. You can avoid that risk by splitting up the investment, at the cost of lowering the overall expected value. So it’s more about how you feel about that risk, and whether you feel avoiding it is worth having a somewhat lower expected return.
  - doopy1 4y ago
    Peter Lynch had a pretty interesting talk where he said that on average the stock market has a sizable dip every few 2-3 years, meaning it's lower at the end of that year than it was at the beginning. Generally though, it goes up over time.
    - layer8 4y ago
      Right, up to now the maximum interval where the market didn’t go up to a new all-time-high is about 15 years, but so far it always ended up reaching a new all-time-high in the end.

mberning 4y ago

Buy all the time. Only reliable way to win.

slaw 4y ago
Past performance is not indicative of future results. Japan stock market JP225 didn't recover yet from 1990 crash.
- rubidium 4y ago
  Yea so buy land if you’re so paranoid about becoming Japan. It’s an island nation with a very unique history. Not a great counterpoint to current US and global economics.
  - argomo 4y ago
    As the saying goes, there are four types of economies: developed, undeveloped, Argentina, and Japan.
    - hanniabu 4y ago
      Why Argentina?
      - astrange 4y ago
        Argentina's economy is a series of endless crises from the government choosing the worst possible ways to intervene in it at every opportunity. Like a reverse South Korea.
  - scrivna 4y ago
    The UK is at more or less the same price as it was in 2000. France same as 2008. Meanwhile SPY is up 2.75x in that period. The US seems to be the anomaly. Value doesn’t always go higher. Maybe the USA is special, maybe not.
    - digitalnatives 4y ago
      SPY is differently weighted than for example FTSE. Most indexes do not factor in dividends, if you look at the total return data where dividends are reinvested you will see there are gains in Europe, but less than the US.
      - scrivna 4y ago
        Thanks, I hadn’t realised the “obvious” indexes were measuring different things
    - lordnacho 4y ago
      Is that with dividends? Watch out because the German DAX actually does have reinvestment in it iirc. Most of the others don't.
      - qznc 4y ago
        An index never includes dividends. An index fond might (accumulating) or might not (distributing).
        lordnacho 4y ago
        https://personal-financial.com/2020/11/27/the-dax-and-its-dividend-trick/ https://personal-financial.com/2020/11/27/the-dax-and-its-di...
        qznc 4y ago
        Thanks. Learned something today.
    - 4y ago
  - rwmj 4y ago
    Buying land in Japan isn't a great idea (except to live on it). You have to pay a hefty annual tax on it. Land even with property on it is so often abandoned they have a word for it and many marketplaces where you can buy abandoned land from the tax office.
- astrange 4y ago
  Do Japanese people have to buy Japanese stocks just because it's the same country?
  - SapporoChris 4y ago
    No, Japanese can invest in other markets using international brokers. I don't know details on the fees and currency conversions. Investing in a foreign exchange is always at a slight disadvantage because of currency conversions and fees. For a US centric view: https://www.investopedia.com/articles/investing/032615/how-trade-foreign-stocks.asp https://www.investopedia.com/articles/investing/032615/how-t...
    - id 4y ago
      US stocks are traded on foreign exchanges. Even if you insist on buying on a US exchange, the currency conversion is not very expensive. If you're a buy and hold investor, it won't matter at all.
  - tasuki 4y ago
    And yet you often see US people recommending to buy US stocks. There are risks and benefits to buying both domestic and international stocks.
- christophilus 4y ago
  If you invested only in the Nikkei on the way up and on the way down, you still came out fine. The only person who didn’t is the person who put all of their savings in at the very top and never bought again.

DantesKite 4y ago

Damn thanks for the great read. This is just what I was looking for.

qznc 4y ago

There is an inverse question: If you have a cash windfall you want to invest, all-at-once or split it up? I have seen a similar analysis (but can’t find it right now). Even if you invest at the all time highs, so the market drops right after you buy, you still win with the all-at-once strategy. The general lesson: Get your money into the market as soon as possible. Maybe more memorable: Time in the market beats timing the market.

layer8 4y ago
Investing in the stock market has the general assumption that, a priori, stocks are more likely to rise than to fall at any given point in time. Under that assumption, the all-at-once strategy has the better expected outcome. Of course, you can be unlucky and end up buying the all-time-high just before a crash. You can avoid that risk by splitting up the investment, at the cost of lowering the overall expected value. So it’s more about how you feel about that risk, and whether you feel avoiding it is worth having a somewhat lower expected return.
- doopy1 4y ago
  Peter Lynch had a pretty interesting talk where he said that on average the stock market has a sizable dip every few 2-3 years, meaning it's lower at the end of that year than it was at the beginning. Generally though, it goes up over time.
  - layer8 4y ago
    Right, up to now the maximum interval where the market didn’t go up to a new all-time-high is about 15 years, but so far it always ended up reaching a new all-time-high in the end.