Dollar Cost Averaging make sense for the HB PP?

[Whiskey River]

I have recently set up my DIY HB PP and wanted to know if it makes sense to dollar cost average in over time rather than just invest all in at one time?
I was planning to dollar cost in over a 12 months period.
I would be interested in hearing what some of the experienced DIY HB PP investors think about this strategy especially since Gold has never been this high in the history of the HB PP.

[clacy]

This question has been asked before, so I would recommend going back through some of the old threads.  I don't think there is any sort of consensus, but I would prefer to DCA. There will be no way to tell which approach would have proved to be better, until after the fact unfortunately.  DCA'ing or lump sum investing are both subject to timing.

If I had to guess, it probably doesn't matter a great deal. Maybe you DCA, but you keep it minimal and do it in say, 2-3 large chunks.  That way your transaction costs aren't too crazy.

[buddtholomew]

If you do decide to DCA, I would recommend contributing to each of the components equally.

[stone]

Whiskey River, I'm also a fairly recent (since Nov)  PP holder. I also had the same doubts as you about whether I had "missed the party". I think the great thing is that the PP so seldom has had a dip in the value of the total portfolio and that is its key feature. You have to see it as a whole to make sense of it. Gumby made a great chart that shows how safe it has been to go all in to the PP at any time over the past 40 years:-
http://gyroscopicinvesting.com/forum/ht ... 066#p17066

The only market timing I ever do is to make sure that I buy gold at options expiry dates. Look at Jesse Cafe Americain for charts that have the gold price with the options expiry dates marked on. The price generally dips at those dates due to the way options traders move the gold market.

Even for volatile portfolios (unlike the PP), is dollar cost averaging actually anything other than a ruse? Have you ever seen a back test with real data that showed dollar cost averaging to help in any way? To my mind there is no logical difference between holding something and buying it except for the transaction costs. If it doesn't make sense for you to buy into the PP now then it doesn't make sense for me to hold it rather than liquidating it immediately.

Gold is at a record price now but the economic situation tallies with that (negative real interest rates along with the fact that their is more money available for financial investment than ever before but companies don't have customers able to afford goods and services due to household debt burdens and the stagnant median wage). I guess gold may continue to go up whilst things continue like they are. Then the situation will change and gold will come back down to earth and we will be grateful that we have the other assets but also that we had the gold and rebalanced out of it over the years to top up stocks as the stock price ground down further (or put LTT or stocks in place of gold in that previous sentence depending on what happens in the great unknown future). Stocks may seem cheap now and gold and LTT may seem very expensive BUT the great thing about the PP is that you constantly get your eyes opened at how wrong such judgments are proved to be with hindsight and yet not suffer because the PP forces you to grit your teeth, ignore your "better judgment" and hold 25% of each asset.

[Whiskey River]

Whiskey River, I'm also a fairly recent (since Nov)  PP holder. I also had the same doubts as you about whether I had "missed the party". I think the great thing is that the PP so seldom has had a dip in the value of the total portfolio and that is its key feature. You have to see it as a whole to make sense of it. Gumby made a great chart that shows how safe it has been to go all in to the PP at any time over the past 40 years:-
http://gyroscopicinvesting.com/forum/ht ... 066#p17066

The only market timing I ever do is to make sure that I buy gold at options expiry dates. Look at Jesse Cafe Americain for charts that have the gold price with the options expiry dates marked on. The price generally dips at those dates due to the way options traders move the gold market.

Even for volatile portfolios (unlike the PP), is dollar cost averaging actually anything other than a ruse? Have you ever seen a back test with real data that showed dollar cost averaging to help in any way? To my mind there is no logical difference between holding something and buying it except for the transaction costs. If it doesn't make sense for you to buy into the PP now then it doesn't make sense for me to hold it rather than liquidating it immediately.

Gold is at a record price now but the economic situation tallies with that (negative real interest rates along with the fact that their is more money available for financial investment than ever before but companies don't have customers able to afford goods and services due to household debt burdens and the stagnant median wage). I guess gold may continue to go up whilst things continue like they are. Then the situation will change and gold will come back down to earth and we will be grateful that we have the other assets but also that we had the gold and rebalanced out of it over the years to top up stocks as the stock price ground down further (or put LTT or stocks in place of gold in that previous sentence depending on what happens in the great unknown future). Stocks may seem cheap now and gold and LTT may seem very expensive BUT the great thing about the PP is that you constantly get your eyes opened at how wrong such judgments are proved to be with hindsight and yet not suffer because the PP forces you to grit your teeth, ignore your "better judgment" and hold 25% of each asset.

[escafandro]

I use Value Averaging for psychological reasons more than anything else. And I'm pretty happy.

[Whiskey River]

Okay thanks for your input.

[clacy]

I use Value Averaging for psychological reasons more than anything else. And I'm pretty happy.

Bingo. That is likely the best reason to DCA.  It is also the best reason to use the HBPP in the first place.  Controlling your emotions is probably the hardest thing to do in trading/investing and arguably the best thing that you can do to put yourself on a successful track.

There are many investment strategies that work, and many of them might very well give you superior returns to the PP, but the vast majority of people can't control their emotions enough to make them work.