馃攳
Dollar Cost Average vs Buy The Dip (SURPRISING) - YouTube
Channel: unknown
[0]
buy stocks every month or buy only when
[3]
the stock price is down which investment
[5]
strategy is better for you
[7]
in the video we will see a study that
[9]
analyzes which strategy is the best for
[12]
long-term investments dollar cost
[14]
average or buy the dip
[16]
hi
[17]
welcome to the holder investor if you
[20]
want to receive more videos about
[21]
investing please consider subscribing to
[23]
this channel
[25]
the dollar cost average or dca is when
[28]
you buy stocks in regular intervals can
[30]
be monthly weekly or in any other period
[34]
the key point of this strategy is that
[35]
the purchases occur regardless of the
[37]
assets price in this way you don't need
[40]
to guess if the stocks are going up or
[42]
down you will buy periodically
[44]
regardless if it is a bull or a bear
[46]
market
[48]
on the other hand the buy the dip
[49]
strategy is when you only buy stocks
[51]
when they are going down as the stock's
[54]
price dips it may present an opportunity
[56]
to pick up shares at a discount price
[59]
the problem here is that you have to
[60]
know how far the stock is going down you
[63]
need to time the market to make this
[64]
strategy work
[66]
nick maggiore made a study comparing the
[68]
dollar cost average and the buy the dip
[71]
strategies for dollar cost average he
[73]
considers an investor who invests 100
[76]
every month and for by the dip an
[79]
investor who saves 100 each month and
[82]
only buys when the market is in a dip
[84]
for this scenario he considers that the
[86]
investor would know exactly when the
[88]
market is at the absolute bottom between
[90]
any two all-time highs
[92]
logically it seems like by the dip can't
[95]
lose if you know when you're at the
[97]
bottom you can always buy at the
[99]
cheapest price relative to the all-time
[101]
highs in that period however if you
[104]
actually run this strategy you will see
[106]
that buy the dip underperforms dca over
[109]
70 percent of the time
[111]
from 1995 to 2018 the buy the dip
[114]
strategy over performed the dollar cost
[116]
average but as we can see in this image
[119]
it was very close
[121]
in this period the buy the dip wins
[123]
because of the 2003 and 2009 dips by the
[127]
dip will outperform dca when big dips
[129]
happen earlier in the time period
[132]
if we look over longer time frames
[134]
historically buy the dip doesn't
[136]
outperform most of the time
[138]
this chart shows the amount of
[140]
outperformance from buy the dip as
[142]
compared to dollar cost average over
[144]
every 40-year period over time
[147]
the dollar cost average outperformed the
[148]
buy-the-dip more than 70 of the time
[152]
in this other image we can see a
[153]
comparison from 1975 and 2014 and dca
[158]
outperformed by the dip
[160]
this happens because while you wait for
[162]
the next dip the market is likely to
[164]
keep rising and leave you behind
[167]
jp morgan asset management's 2019
[170]
retirement guide shows the impact that
[172]
pulling out of the market has on a
[173]
portfolio from 1999 to 2018 if you
[177]
missed the top 10 best days in the stock
[179]
market your overall return was cut in
[182]
half
[183]
the return went from positive to
[184]
negative by missing the 20 best days of
[187]
the market over 20 years
[189]
when trying to time the market you can
[191]
end up missing these days waiting for a
[193]
fall that will take a long time to
[195]
happen and by doing so lose the
[197]
potential return of some of these days
[200]
what makes the buy the dip strategy even
[203]
more problematic is that we have always
[205]
assumed that you would know when you
[207]
were at every bottom
[208]
unless you have a crystal ball you will
[211]
not be able to achieve that
[213]
with a variation of by the dip where the
[215]
strategy misses the bottom by two months
[217]
dca over performed the buy the dip 97 of
[221]
the time
[222]
so
[223]
i think that the best option is the dca
[226]
as you don't have to time the market and
[228]
the study shows that it will have a good
[230]
chance of overperforming the buy the dip
[232]
strategy
[234]
if you like the video please hit the
[236]
like button and subscribe
[238]
bye
Most Recent Videos:
You can go back to the homepage right here: Homepage