DCA strategy during bear market

[Cupid Stunt]

This forum is all DCA, passive investing one.

The moment you suggest anything resembling value investing, you will be labelled a market timer and be flamed.

If Warren Buffett posted here under a pseudonym all the BBCWatcher and ShinyThings will attack him.

People here are very sensitive about their DCA mantra, they have bought into the philosophy and it is a religion to them.

Anything else other than "Just buy no matter what" is blasphemy and you deserve to go to hell.

Becareful of your heretic investing thoughts.

 

[reddevil0728]

This forum is all DCA, passive investing one.

The moment you suggest anything resembling value investing, you will be labelled a market timer and be flamed.

If Warren Buffett posted here under a pseudonym all the BBCWatcher and ShinyThings will attack him.

People here are very sensitive about their DCA mantra, they have bought into the philosophy and it is a religion to them.

Anything else other than "Just buy no matter what" is blasphemy and you deserve to go to hell.

Becareful of your heretic investing thoughts.

not exactly. so long as there is some sort of sound basis why you are waiting it is fine. the issue is some people are just making decisions based on randomness

 

[Cupid Stunt]

not exactly. so long as there is some sort of sound basis why you are waiting it is fine. the issue is some people are just making decisions based on randomness

He already gave his sound basis liao. He is going by P/E ratio loh. If the P/E ratio is at reasonable enough value, he will buy. He is prepared to wait for the P/E ratio to go down and ok with potentially missing out.

 

[stanlawj]

But why random 10y?

1973-1982

 

[reddevil0728]

He already gave his sound basis liao. He is going by P/E ratio loh. If the P/E ratio is at reasonable enough value, he will buy. He is prepared to wait for the P/E ratio to go down and ok with potentially missing out.

Ya lor. So is ok ma.

there are some that just say oh “too high” aiming for xxx.

and no basis, not even from a TA perspective.

like just some random number.

 

[reddevil0728]

1973-1982

Then like that you are suggesting, if never happen before means wouldn’t happen?

 

[stanlawj]

Then like that you are suggesting, if never happen before means wouldn’t happen?

this time the crash will be worse. US at 130% debt to GDP in 2021 vs only 30% debt to GDP in 1980.

 

[BBCWatcher]

All good points. I am only saying that your earlier "37 cents hamburger" analogy is too extreme. One has to go all the way back to 1957 when burgers was 37 cents.

McDonald’s U.S. sold hamburgers for 37 cents in 1976.

this time the crash will be worse. US at 130% debt to GDP in 2021 vs only 30% debt to GDP in 1980.

Oh? What’s Japan’s government debt to GDP ratio?

 

[reddevil0728]

this time the crash will be worse. US at 130% debt to GDP in 2021 vs only 30% debt to GDP in 1980.

so you got crystal ball now?

 

[stanlawj]

McDonald’s U.S. sold hamburgers for 37 cents in 1976.

Oh? What’s Japan’s government debt to GDP ratio?

US financial system is highly leveraged and most of the debt is owned by foreign govts, not domestically like in Japan.

By the way, you missed the point of my argument. How do you set up a DCA system if it is the final crash, and if it's not the final crash, then what's the point of DCA if it takes 10 years to recover like 1973-1982?

Futhermore, SP500 was not an inflation hedge during 1970s stagflation.
https://www.longtermtrends.net/stocks-commodities-ratio/

My answer would be simple: never DCA into a bear market. Only DCA in a bull market.

 

[yiron]

This forum is all DCA, passive investing one.

The moment you suggest anything resembling value investing, you will be labelled a market timer and be flamed.

If Warren Buffett posted here under a pseudonym all the BBCWatcher and ShinyThings will attack him.

People here are very sensitive about their DCA mantra, they have bought into the philosophy and it is a religion to them.

Anything else other than "Just buy no matter what" is blasphemy and you deserve to go to hell.

Becareful of your heretic investing thoughts.

I don't think the group at large is so close-minded. The odd thing is when people claim that they are doing DCA but are in reality doing more of alpha bets / timing market.
It is fine to make alpha bets / try to time the market, just that history (while may not always reflective of future performance) have shown that it is very hard to consistently beat the market hence it may not be well suited for everyone.
But if you have a solid thesis and lots of conviction, all the power to you.

 

[celtosaxon]

Why DCA investing? It is to put every dollar of your savings to work as soon it becomes available, so that your investment horizon on each dollar invested is as long as possible. Generally, the longer your investment horizon, the better your returns.

However, if you have come into a windfall, adopting DCA in this situation is less clear cut. While DCA can reduce timing risk, the odds are actually less likely to be positive versus lump sum — again, the key principle is to invest every dollar available as early as possible to have the best odds at the highest long-term returns.

The absolute worst thing you can do is let your savings accumulate in cash and then try to time market entry. This is a rampant problem with investors and I’ve regrettably been guilt of it myself in the past. I believe it is the single biggest source of market underperformance by ordinary investors.

 

[Cupid Stunt]

The absolute worst thing you can do is let your savings accumulate in cash and then try to time market entry

Another DCA zealot.

Tell this to Buffett loh, he loves to hold a ton of cash and time the market.

This 2 years he never buy anything, now he start to buy Apple, still holding 100billion in cash.

 

[reddevil0728]

Another DCA zealot.

Tell this to Buffett loh, he loves to hold a ton of cash and time the market.

This 2 years he never buy anything, now he start to buy Apple, still holding 100billion in cash.

You are comparing yourself to buffet?

 

[BBCWatcher]

US financial system is highly leveraged and most of the debt is owned by foreign govts, not domestically like in Japan.

Let’s assume that’s true. So what? This debt is owed in U.S. dollars, not in bushels of wheat or ounces of silver (as examples).

 

[Cupid Stunt]

You are comparing yourself to buffet?

I'm comparing you to Buffett.

Totally different approaches to investing.

 

[tangent314]

You should backtest your "buy the dip" strategy to check if it actually outperforms DCA.

This guy has actually done the backtesting and even assuming perfect knowledge of when the bottom occurs, DCA still wins out most of the time because of the opportunity cost of not being invested when the bottom takes too long to occur.

https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/
Real performance will be far worse since you will never guess exactly when the bottom happens.

 

[reddevil0728]

I'm comparing you to Buffett.

Totally different approaches to investing.

You are making the point I’m making. We aren’t Buffett.

 

[BBCWatcher]

Warren Buffett: “Instead of stock picking, Buffett suggested investing in a low-cost index fund. ‘I recommend the S&P 500 index fund,‘ Buffett said, which holds 500 of the largest companies in the U.S., ‘and have for a long, long time to people.’”

In the Singaporean context this’d more likely be a MSCI or FTSE global stock index fund since most residents of Singapore aren’t going to be retiring in a U.S. dollarized (or fixed U.S. dollar exchange rate) country.

 

[jayou8]

You should backtest your "buy the dip" strategy to check if it actually outperforms DCA.

This guy has actually done the backtesting and even assuming perfect knowledge of when the bottom occurs, DCA still wins out most of the time because of the opportunity cost of not being invested when the bottom takes too long to occur.

https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/
Real performance will be far worse since you will never guess exactly when the bottom happens.

Why only consider DCA? For those comfortable with Python you can validate this with your jupyter notebook.