RetireJapan

TokyoBoglehead wrote: ↑Mon Oct 17, 2022 12:32 pm Vanguard has a great study, it's been linked in this forum a few times. https://www.google.com/url?sa=t&source= ... GhqX28B0ce

Statically speaking LSI beat DCA the majority of the time. The future is unknowable, so LSI is the "on paper" rational choice. However, if it's too much stress, then DCA is right for you.

TBS wrote: ↑Mon Oct 17, 2022 1:39 pm

TokyoBoglehead wrote: ↑Mon Oct 17, 2022 12:32 pm Vanguard has a great study, it's been linked in this forum a few times. https://www.google.com/url?sa=t&source= ... GhqX28B0ce

Statically speaking LSI beat DCA the majority of the time. The future is unknowable, so LSI is the "on paper" rational choice. However, if it's too much stress, then DCA is right for you.

Yes, it has. Though I don't really buy the argument that DCA'ing is a rational choice to counter the stress of market volatility*.

People need to understand that volatility is inevitable concomitant of stock market investing. Numerically speaking, there is no difference between a bear market wiping 50% off the value of a portfolio two months after a lump sum investment, or two months after a DCA period finishes. In both cases, you end up 50% poorer from a position where you previously were.

Yes, DCA lowers the consequence of any downwards volatility over the initial period. But after that, the game is the same.

Rationally investors should instead be accepting upfront that a) volatility is an unavoidable hazard, and b) that it needs to be managed appropriately by choosing an equity investment percentage that suits their circumstances and risk tolerance.

The equity ratio can increase over time, of course. But conflating this point with DCA means many new investors aren't thinking properly about the amount of volatility they can sustain, I feel. Certainly a DCA-style ramp up of exposure from low to max volatility over 6 months to a year is probably too fast a rate for many new or uneasy investors.


*Note I'm not saying this what you believe, @TokyoBoglehead, just rambling on from my soapbox

Risk of loss and emotional considerations
Even though LSI’s average outperformance and risk-adjusted returns have been greater than those of DCA, risk-averse investors may be less concerned about averages than they are about worst-case scenarios, as well as the potential feelings of regret that would occur if a lump-sum investment were made immediately prior to a market decline. These concerns are not unreasonable. We found that DCA performed better during market downturns, so DCA may be a logical alternative for investors who prefer some short-term downside protection.

So I am wondering if we this year would have been in the a worse case situation. Dropping say 4 million yen in January to see it walk off a cliff.Where as now, over this year, the larger amounts put in every week "might" perform better.

Clearly, if markets are trending upward, it’s logical to implement a strategic asset allocation as soon as possible because it should offer a higher long-run expected return than cash.

Tkydon wrote: ↑Wed Oct 19, 2022 6:19 am https://www.schwab.com/learn/story/does ... iming-work

TBS wrote: ↑Wed Oct 19, 2022 11:47 am

Tkydon wrote: ↑Wed Oct 19, 2022 6:19 am https://www.schwab.com/learn/story/does ... iming-work

As one of the forum's more vocal advocates for trying to time the market, it is surprising that you posted this.

In brief
1.Given the difficulty of timing the market, the most realistic strategy for the majority of investors would be to invest in stocks immediately.

2, Procrastination can be worse than bad timing. Long term, it's almost always better to invest in stocks—even at the worst time each year—than not to invest at all.

3. Dollar-cost averaging is a good plan if you're prone to regret after a large investment has a short-term drop, or if you like the discipline of investing small amounts as you earn them.

NobbyTokyo wrote: ↑Thu Oct 20, 2022 3:05 pm hi, I have a probably newbie question about Nisa on SBI. I recently bought some units in a tracker fund and it seems that I didn't check a particular box and the investment ended up in my regular tax-paying broker account when I wanted it in my Nisa account. Can I move that investment into my Nisa account, which would still be within my ¥1.2m allowance for this year? It probably says whether it is possible or not somewhere on the site, but the jungle of Japanese small print is daunting! Any comments would be appreciated