Marathon to wealth

L

Lights

I have concluded the best compounded return to generate superior wealth longterm is to buy:

DIA

cost average every month over 15-20 years sliding scale as markets rise, invests less vs previous month, if markets drop, invests more vs. previous month up to min/max monthly contribution values.. It will beat 90% of all mutual funds/hedge funds over 10 years and have a statistical risk edge over trading your own strategy.

This assumes no redemptions for 20 years and assume reinvest of all dividends.

Assume an initial investment of $100k with 10k contribution per month, you will have $10MM in 20 years.


Up that to $1,000,000 initial and 100k contribution per month, you would have $100,000,000.
 
Great WOW numbers......

Is this based on some back-tested results?

There is a Value Cost Averaging Strategy that does something similar but this involves getting out of investments when market is at NHs.

How much do you pull back if the market is down?

How much to you add if the market is up?

Please share details, and without it, it becomes a 'great strategy deployed' by a money manager that we cannot duplicate.

An excel file of some sort would be just fantastic.

THanks.

KKP
 
It's very simple. It assumes that buying a market index will beat majority of managers and picking individual stocks. based on avg annual return in market, add compounding interest over 20 years and a method to cost average based on month over month trend in market. All dividends reinvested.

The most powerful force in the universe is compound interest.
-Einstein.

Quote from kenny1924:

Great WOW numbers......

Is this based on some back-tested results?

There is a Value Cost Averaging Strategy that does something similar but this involves getting out of investments when market is at NHs.

How much do you pull back if the market is down?

How much to you add if the market is up?

Please share details, and without it, it becomes a 'great strategy deployed' by a money manager that we cannot duplicate.

An excel file of some sort would be just fantastic.

THanks.

KKP
More...
 
Quote from Lights:

DIA cost average sliding scale as markets rise, invests less, if markets drop, invests more vs. previous month ...$100k with 10k contribution per month, you will have $10MM in 20 years.
More...

Or a CAGR of about 12%. Not much of a gain for your
"cost average." As another poster pointed out, what
you have here is a variation of Edelson's Value Averaging.
Only not a very efficient variation. There are some
interesting spreadsheets on value averaging at gummy-
stuff dot org. The versions there will do better than
yours. If you are going to martingale it, at least use
a good one.

As a side note, Bill Gates allegedly uses value averaging
for his own investments.

Also, Edelson wrote a book on it. Probably available
used on Amazon for a less than $10. Worth it if the
reading of it increases your terminal wealth another
$10mm.

Glad to hear you can afford to sock away $10k per
month at your age. That's rare discipline in an 18
year old.
 
Quote from Lights:

It's very simple. It assumes that buying a market index will beat majority of managers and picking individual stocks. based on avg annual return in market,
More...

Except if the market pulls a 1968-1984
 
with a CAGR of 12%, u have $100MM after 20 years with an initial contribution of $1MM and $100k per month. It thoroughly defeats your strategy of buying YM puts.

Quote from Kevin Schmit:

Or a CAGR of about 12%. Not much of a gain for your
"cost average." As another poster pointed out, what
you have here is a variation of Edelson's Value Averaging.
Only not a very efficient variation. There are some
interesting spreadsheets on value averaging at gummy-
stuff dot org. The versions there will do better than
yours. If you are going to martingale it, at least use
a good one.

As a side note, Bill Gates allegedly uses value averaging
for his own investments.

Also, Edelson wrote a book on it. Probably available
used on Amazon for a less than $10. Worth it if the
reading of it increases your terminal wealth another
$10mm.

Glad to hear you can afford to sock away $10k per
month at your age. That's rare discipline in an 18
year old.
More...
 
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