Investing in SPY using dollar cost averaging, searching for ideas.

[Rehoboth]

Quote from FreakofNature:

When do you sell ?

FoN

Totally different animal.

There are many different ways to approach it but everything depends on your time frame.

But my short answer would be sell at the top

 

[Rehoboth]

Quote from oldtime:

I like that idea. Actually, I have to DCA into something next year, I may try it.

All these MM strategies use to make a lot more sense back when you could get 6+% in bonds.

Have you run the numbers on your strategy? What do you call it?

I always rely on mathmaticians to tell me if the crazy schemes I come up with actually improve anything or just make me feel better because I am too scared to take on risk. That's how I know DCA can improve most strategies.

I dont have a name for it, I developed it because I wanted a no brain method of using capital across various markets(stocks commodities, etc...) But I did not want to add capital to stagnant markets, hence the price movement portion. Also I wanted to take advantage of corrections, hence the reset schedule portion.

Its hard to talk about returns because of the random starting point and what is being done with the sideline capital. But if you pick any random point in the past it will give you a better overall price rather then DCA or BnH. The reason is corrections are pretty violent and you are buying with more frequency on the recovery in a shorter period of time. Think about the 87 crash, you would have bought a lot more at lower prices rather then 1 monthly purchase with DCA.

I can also tell you that this definitely does not work on individual stocks.

 

[oldtime]

Quote from Rehoboth:

I dont have a name for it, I developed it because I wanted a no brain method of using capital across various markets(stocks commodities, etc...) But I did not want to add capital to stagnant markets, hence the price movement portion. Also I wanted to take advantage of corrections, hence the reset schedule portion.

Its hard to talk about returns because of the random starting point and what is being done with the sideline capital. But if you pick any random point in the past it will give you a better overall price rather then DCA or BnH. The reason is corrections are pretty violent and you are buying with more frequency on the recovery in a shorter period of time. Think about the 87 crash, you would have bought a lot more at lower prices rather then 1 monthly purchase with DCA.

I can also tell you that this definitely does not work on individual stocks.

that's why I always say on most systems. Well Martingale has his system, you minds well just call it Rehobothing.

 

[oldtime]

Quote from Butterball:

LIBOR is priced into equity index futures. There is no benefit in buying SPY vs. buying ES futures other than potentially a difference in tax treatment.

If you buy ES futures and then put the remaining collateral into 6% yielding bonds that trade would be identical to putting 100% of your capital into SPY and using leverage to buy 100% capital minus ES margin worth of the bonds, paying LIBOR for the leverage borrowing. Essential it's a carry trade that earns you bond yield minus LIBOR. Carry can be great.. until it isn't.

thanks, then would it be the same for gold? Physical vs futures?

 

[FreakofNature]

Revisiting this old discussion I created.

Well, it worked "ok". Why because I caught the rally way underleveraged.

Another downside of averaging down.

FoN

 

[Tradingdummy]

To the OP

I have not read this entire thread, but if it has not been mentioned already, you may want to use options when feasible. I assume you are talking about DCA for the long term?