Key insights
- The post discusses alternative investment strategies to Dollar-Cost Averaging (DCA) for value investors, specifically addressing the issue of buying too early. The author explores a strategy of increasing investment amounts as the price declines, aiming to improve entry points. While the discussion is relevant to individual investment approaches, it doesn't present a broad market signal. The potential for 'timing the market' is acknowledged, leading to a slightly negative influence due to increased risk.
I have been practicing the craft of value investment over the last year (traditional Graham/Buffet style , with some modifications).
Over the last year one of my main learning was that I am buying too soon. All the stocks did well overall but I missed out on the bottom by 10-20%. Mainly because I bought in one or two big chunks for the fear of missing out.
I know DCA could have helped me so I will consider that going forward. That said, are there better strategies than DCA?
For example, let us say I have 100k to invest in a stock that has a margin of safety of 20%. With DCA I can just split it in 10 x 10k with each purchase on Friday every week (10 weeks).
Alternatively, I can do 1k, 2k, 4k 8k, 16k... every week (or based on price triggers, over a period of weeks/months) depending on whether the price goes up or down. I stop when I reach 100k total and wait for the market to recover the value to my fair value (or above). [This sort of sounds like timing the market, am I? ]
Are there strategies like this that are not DCA but in theory perform better? Or DCA is as good as it gets?