10k invest all at once or dripfeed?

jimjames

adindas said:

Notepad_Phil said:

adindas said:

Notepad_Phil said:

adindas said:

...

Here is another expert opinion regarding investing in the bear market which is specifically referring to DCA (e.g drip-feeding)

https://www.investopedia.com/8-ways-to-survive-a-market-downturn-4773417

If that is correct, then why should anyone hold onto their currently invested portfolio? If DCA gives you a better overall entry price then they should sell their investments now and then buy them back using DCA.

I will let you figure it out yourself and do the math. But the clue here is that No strategy ever suggest to sell a good blue chip stocks or a well diversified fund at a loss just because you are already down 10%+ and buy it back again at cheaper price (IF YOU WERE LUCKY)

But that is exactly the logical conclusion of your post about DCA. Sell your investments now at price x and then use DCA so that you buy them back at less than x.

E.g. I see no logical difference between having a  £10,000 lump sum in cash or having a portfolio of investments that were once worth £15,000 but are now only worth £10,000  - if you believe that DCA will result in a statistically better performance than a lump sum then you should sell and then rebuy using DCA.

P.S. I don't believe that DCA is better than a lump sum, so I would never do this.

Your logic is woefully flaw.

No, the logic isn't flawed. It's extending what you have said about DCA and using to show that it doesn't always work. If it was guaranteed then everyone would do as suggested. As per my post earlier it really depends on the points you enter the market. DCA isn't promoted as better than lump sum investing, it's showing that carrying on investing monthly through thick and thin is a better option than panicking and stopping if markets drop.

adindas

Well, I never said it always work. You correctly pointed out if it was guaranteed work then everyone would become a millionaire. It is all about probability which one with higher probability. If the statistics is saying Life expectancy at birth in the UK in 2018 to 2020 was 79.0 years for males and 82.9 years for females it does not mean every male and female in the UK will life that long. The only things is guaranteed to happen is that death, tax or you have a crystal ball.

The inflation could get much worse than expected, supply chain, chip shortages could get worse, china could invade Taiwan, everything could happen. But the opposite could also true. And keep in mind we are talking about the bear marker with a lot of FUD (not bull market)

Notepad_Phil said:

I just took your post that DCA would be better than a lump sum to its logical conclusion which would imply that you should sell and reinvest back in via DCA

E.g. say we have have three people:

SellAndReinvest has a portfolio that at one time was worth £15,000 but is now only worth £10,000. They sell it (for whatever reason) and get £10,000. They then have second thoughts. Should they invest it back in one go or should they invest it via DCA?

HasCash has £10,000 in cash. Should they invest it in one go or should they invest it via DCA?

In my opinion this is the most silly thing to do, If you are down from £15.000 to £10,000 of good investment such as blue chip stocks, a well diversified fund and you sold it, it will mean you are already down 33.33%. Whatever you do lump sum or DCA it is difficult to  get that return just to recover your loss. It is different entirely different if you have fresh cash to DCA as you have not incurred any losses. In fact this money could sit in saving a.c paying interest 1.5%. What you actually do it you slowly rebalancing your bond holding and increase your equity.

And i remind you again any the link referring to this statistics showing that Lump sum beats DCA in the bear market with a lot of FUD. As I mention it many times In the Bull market and a long term everyone will make money, even a monkey will make money throwing money randomly in a well-diversified funds.

jcuurthht

If you inherited 10k of stocks today, would you sell them all and start DCA'ing them back in to the market, or would you leave them there?

I'm inheriting 500k+ soon. I'll be lump summing it in to Vanguard All World ETF. But I'm 37, so I have plenty of time to recover from the market crash that will probably occur the day after I invest.

Swipe

For the sake of just £10K I'd lump sum it

Notepad_Phil

adindas said:

And i remind you again any the link referring to this statistics showing that Lump sum beats DCA in the bear market with a lot of FUD. As I mention it many times In the Bull market and a long term everyone will make money, even a monkey will make money throwing money randomly in a well-diversified funds.

Nope, just as there are no statistics to show otherwise, but there are statistics out there which show that given a random start point then lump sum will on average beat DCA.

Obviously DCA will beat lump sum if you start just before a sustained fall in the markets - the question is how do you know that we're about to hit a sustained fall in the markets and why has the rest of the market not figured that out too.

And if you can time the markets or somehow figure out that we're in a suitable FUD period so that now is the best time to use DCA then you absolutely should sell all of your investments and start to DCA back in regardless of whether your portfolio is up or down. The fact that everybody doesn't do this leads to fairly obvious conclusions.

adindas said:

Notepad_Phil said:

I just took your post that DCA would be better than a lump sum to its logical conclusion which would imply that you should sell and reinvest back in via DCA

E.g. say we have have three people:

SellAndReinvest has a portfolio that at one time was worth £15,000 but is now only worth £10,000. They sell it (for whatever reason) and get £10,000. They then have second thoughts. Should they invest it back in one go or should they invest it via DCA?

HasCash has £10,000 in cash. Should they invest it in one go or should they invest it via DCA?

In my opinion this is the most silly thing to do, If you are down from £15.000 to £10,000 of good investment such as blue chip stocks, a well diversified fund and you sold it, it will mean you are already down 33.33%. Whatever you do lump sum or DCA it is difficult to  get that return just to recover your loss. It is different entirely different if you have fresh cash to DCA as you have not incurred any losses. In fact this money could sit in saving a.c paying interest 1.5%. What you actually do it you slowly rebalancing your bond holding and increase your equity.

I agree it's silly, but not for the reason that you think it's silly. If DCA is better in the situation you describe then why does it matter how they got the £10,000. Say for instance on average it was found that using DCA to buy VWRL meant a £10,000 cash sum rose to £18,000, but that lump sum investing straight into VWRL meant that it only got to £17,000. That means that the person who has kept their portfolio in VWRL which was worth £10,000 now has a portfolio worth £17,000, (you do agree on that don't you?) but if they had sold it and started to DCA then it would be worth £18,000. 

MK62

If you believed the markets were going to fall over a period, it would be a bit daft to sell out and then drip feed back in.......surely you'd sell out, wait out the period and then buy back in......you might use drip feeding if you had no idea which way the market would go, but then in that case you wouldn't sell out in the first place.....

adindas

Notepad_Phil said:

Nope, just as there are no statistics to show otherwise, but there are statistics out there which show that given a random start point then lump sum will on average beat DCA.

We got into a length conversation because this is what you said

And you finally acknowledge you do not have that statistics, wasting everyone time and space

Notepad_Phil said:

And if you can time the markets or somehow figure out that we're in a suitable FUD period so that now is the best time to use DCA then you absolutely should sell all of your investments and start to DCA back in regardless of whether your portfolio is up or down. The fact that everybody doesn't do this leads to fairly obvious conclusions.

I agree it's silly, but not for the reason that you think it's silly. If DCA is better in the situation you describe then why does it matter how they got the £10,000. Say for instance on average it was found that using DCA to buy VWRL meant a £10,000 cash sum rose to £18,000, but that lump sum investing straight into VWRL meant that it only got to £17,000. That means that the person who has kept their portfolio in VWRL which was worth £10,000 now has a portfolio worth £17,000, (you do agree on that don't you?) but if they had sold it andstarted to DCA then it would be worth £18,000. 

And for correction, timing the market is not uncommon. Warren buffet is a contrarian who time the market.  'Be Fearful When Others Are Greedy and Greedy When Others Are Fearful'. Other contrarians are timing the market waiting until there is a blood on the street before they strike. Many HF managers, are timing the market using technical analysis. The traders are making money by timing the market on each single trading day. They do not get it 100% right but they only need 50%+ to beat the other alternative, not timing the market. They do time the market every single day, so nothing to do with DCA vs Lumpsum in the bear market.

Everyone who got involved in DIY investing could recognise what the bear market is, should know that bear market is different with bull market.

When you originally have £15.000 and you sold it at a loss for £10,000. £5,000 (e.g 33.33%) is already gone. This is not probability. This is nothing to do with DCA vs Lump sum.

DCA beat lump sum is about probability. Even the odd is in your favour it does not mean you will get your £5,000 back. What not to understand here!!!

Notepad_Phil

Adindas, the statistic was and is correct. If you believe that it is wrong in today's market then please give a rational reason why that would be and why you wouldn't sell up to use DCA if that was the case.

I note that you haven't replied to my question of 

Say for instance on average it was found that using DCA to buy VWRL meant a £10,000 cash sum rose to £18,000, but that lump sum investing straight into VWRL meant that it only got to £17,000. That means that the person who has kept their portfolio in VWRL which was worth £10,000 now has a portfolio worth £17,000, (you do agree on that don't you?) but if they had sold it and started to DCA then it would be worth £18,000. 

I think until you answer that then it's pointless continuing.

adindas

Notepad_Phil said:

Adindas, the statistic was and is correct. If you believe that it is wrong in today's market then please give a rational reason why that would be and why you wouldn't sell up to use DCA if that was the case.

I note that you haven't replied to my question of 

Say for instance on average it was found that using DCA to buy VWRL meant a £10,000 cash sum rose to £18,000, but that lump sum investing straight into VWRL meant that it only got to £17,000. That means that the person who has kept their portfolio in VWRL which was worth £10,000 now has a portfolio worth £17,000, (you do agree on that don't you?) but if they had sold it and started to DCA then it would be worth £18,000. 

I think until you answer that then it's pointless continuing.

We have been wasting a lot of time and energy talking about this. Please find out this statistics you are referring to ??

DCA vs Lump sum is about probability, it is not certainty.

You sold your shares at a loss you lost your money. This is certainty not about probability. So what not to understand here. if you apply to your example.

If you have option get £5,000 now or you are  promised to get £5,000 in the future with probability of 75% (say) which one you choose ?? I know what to choose i do not know about you. But I know some people are making a silly mistake when making a choice

The same thing with the HF, warren buffet, the traders timing the market is also about the game of probability. In statistics there is also what is so called degree of confidence. From your posting you definitely do not understand the concept of probability, degree of confidence.

Notepad_Phil

adindas said:
You sold your shares at a loss you lost your money. This is not about probability.
DCA vs Lump sum is about probability, it is not about certainty. So what not to understand here.

If you have option get £5,000 now or you are  promised to get £5,000 which one you choose ??

The same thing with the HF, warren buffet, the traders timing the market is also about the game of probability. In statistics there is also what is so called degree of confidence.

You really don't get it do you. You're not selling and just walking away so you've got a permanent £5,000 loss you're simply selling to free up £10,000, and I really can't see what you mean about getting £5,000 now or a promise to get £5,000.

I can't see any substantial difference between someone selling and then immediately buying back (i.e. lump sum investing) from someone who simply keeps their money fully invested - can you? So if you wouldn't sell your portfolio now to reinvest via DCA then you can't believe that DCA will on average beat a lump sum in the current market with all the FUD that you say it contains.