DCA and Increasing this with the dip.

[Bubblegun]

I read an interesting post, and I can't for the life of me remember where, but they said, if the markets are going up, dropping in a lump sum is a good strategy as its working harder.
The when markets are going down, to do DCA. because you're slowing dripping that money in, when you don't know "Exactly" where the bottom is, and you can save some for the Lump sum when the up turn comes.

Kinda makes sense doing both.
Right, now I'm still doing DCA while it's going down.

[Tkydon]

I read an interesting post, and I can't for the life of me remember where, but they said, if the markets are going up, dropping in a lump sum is a good strategy as its working harder.
The when markets are going down, to do DCA. because you're slowing dripping that money in, when you don't know "Exactly" where the bottom is, and you can save some for the Lump sum when the up turn comes.

Kinda makes sense doing both.
Right, now I'm still doing DCA while it's going down.

An earlier note of mine in this thread.

viewtopic.php?p=21450&hilit=LSI+DCA#p21450

[TBS]

An earlier note of mine in this thread.

viewtopic.php?p=21450&hilit=LSI+DCA#p21450

Which part did you mean? Was it this gem?

...
I believe that the Yen may very well strengthen as the flight to safety takes place, further amplifying foreign denominated asset price changes to the downside.
...

Written back when the yen was 115 to the dollar


No, but it is interesting to see some of the arguments on display here. The DCA proponents believe you can predict short term market movements, or, more generously, believe you should try and actively bet on short term market movements. However both Tkydon and Gulliver admit to selling well before yen-based markets peaked in April, so enticing figures like Gulliver posted in terms of absolute peak to trough swings are not the right framing for gauging potential returns (in the best case that the gamble pays off).

Gulliver makes the argument that it is ok to miss out on future gains just because their investments have made money in the past. This is exactly the logical fallacy market timers fall back upon when they get things wrong and have to buy back in at higher cost. It is also irrelevant for anyone who is investing fresh (to them) money.

Even the reducing volatility argument proposed for DCA, i.e. it is better for people who would be spooked by a sharp fall after lump sum investing, is illogical when you think about it. After the DCA period is over, once all the money is invested, the volatility moving forward is the same as lump sum investing. There will be a market crash in future that won't be predicted, and the instantaneous value of the investments will drop 40+%. If people are not comfortable with this and are at risk of panic selling, equity markets are not a good place for them to be.

[Tkydon]

Continuing the DCA Challenge

Seventh Month (July) of my 2 year experiment to test whether a Single Lump Sum or Dollar Cost Averaging is the better strategy right now, starting the End of Jan 2022...

The VOO issued its Quarterly Dividend 0n 24 Mar 2022 of $1.374, which after Japan Dividend Taxes of 20.315% netted to $1.095 which I calculated as being reinvested into the VOO...

LSI

We commited Lump Sum of Y200,000 invested in the S&P 500 VOO at price, 412.52 on Sat 05 Feb 22
https://finance.yahoo.com/quote/VOO?p=VOO

We know the Average Price. It's 05 Feb 22 price, $412.52 x 05 Feb 22 USDJPY 115.18 = Y47,514.0536
We know how many units there are. Y200,000 / 05 Feb 22 USDJPY 115.18 / 05 Feb 22 price, $412.52 = 4.209 Units.

05-Feb-2022 Y200,000 / USDJPY 115.18 / price $412.52 = 4.209 Units.

Value as of 05-Mar-2022:
4.209 Units x 05 Mar 22 USDJPY 114.78 x 05 Mar 22 price, $397.34 = Y191,958.538 = -4.02%

Dividend Net of Tax Reinvested:
25-Mar-2022 $1.0948 x 4.209 Units / price $416.12 = 0.011 Units

05-Apr-2022 Total Units: 4.22

Value as of 05-Apr-2022:
4.22 Units x 05 Apr 22 USDJPY 122.562 x 05 Apr 22 price, $416.32 = Y215,325.55 = +7.66%

Value as of 05-May-2022:
4.22 Units x 05 May 22 USDJPY 129.771 x 05 May 22 price, $394.34 = Y215,953.84 = +7.98%

Value as of 05-June-2022:
4.22 Units x 05 June 22 USDJPY 130.860 x 05 June 22 price, $ 377.44 = Y208,433.39 = +4.217%

Value as of 05-July-2022:
4.22 Units x 05 July 22 USDJPY 136.1180 x 05 July 22 price, $350.44 = Y201,299.03 = +0.6495%


DCA

And I will put my Y200,000 cash into the S&P500 VOO starting 05 Feb 22, Y10,000, and Y10,000 on the 5th. day of every month (or the previous working day) for the next 19 months, and then, at the end of January 2024 we compare the result.
https://finance.yahoo.com/quote/VOO?p=VOO

05-Feb-2022 Y10,000 / USDJPY 115.18 / price 412.52 = 0.2104 Units.
05-Feb-2022 Y190,000 in the bank at 0% Interest.
05-Feb-2022 Total 0.2104 Units

05-Mar-2022 Y10,000 / USDJPY 114.78 / price 397.34 = 0.219 Units
05-Mar-2022 Y180,000 in the bank at 0% Interest.
05-Mar-2022 Total 0.4294 Units

Dividend Net of Tax Reinvested:
25-Mar-2022 $1.0948 x 0.4294 Units / price $416.12 = 0.0011 Units

Value as of 05-Mar-2022:
0.4294 Units x USDJPY 114.78 x Price, $397.34 + 180,000 = Y199,583.51 = -0.2082%

05-Apr-2022 Y10,000 / USDJPY 122.562 / price 416.32 = 0.196 Units
05-Apr-2022 Y170,000 in the bank at 0% Interest.
05-Apr-2022 Total 0.6265 Units

Value as of 05-Apr-2022:
0.6265 Units x USDJPY 122.562 x Price $ 416.32 + 170,000 = Y201,967.17 = +0.98%

05-May-2022 Y10,000 / USDJPY 129.771 / price 394.34 = 0.1954 Units
05-May-2022 Y160,000 in the bank at 0% Interest.
05-May-2022 Total 0.8219 Units

Value as of 05-May-2022:
0.8219 Units x USDJPY 129.771 x Price $ 394.34 + 160,000 = Y202,059.825 = +1.03%

05-June-2022 Y10,000 / USDJPY 130.860 / price 377.44 = 0.2024 Units
05-June-2022 Y150,000 in the bank at 0% Interest.
05-June-2022 Total 1.0243 Units

Value as of 05-June-2022:
1.0243 Units x USDJPY 130.860 x Price $377.44 + 150,000 = Y200,595.119 = +0.2975%

05-July-2022 Y10,000 / USDJPY 136.1180 / price $350.44 = 0.2096 Units
05-July-2022 Y140,000 in the bank at 0% Interest.
05-July-2022 Total 1.2339 Units

Value as of 05-June-2022:
1.2339 Units x USDJPY 136.1180 x Price $350.44 + 140,000 = Y198,860.33 = -0.569%

And a third scenario:

My Alter Ego will one day decide to invest another Y200,000 Lump-Sum at the time of my choosing, sometime between now and the end of January 2024. Until then, the Y200,000 of dry powder sits in the bank at 0% Interest...

I will give advanced notice, so you would not be able to accuse me of hind-sight...

Not Yet. Currently planning September/October 2022. Subject to change...


Or how about eMAXIS Slim全世界株式(オール･カントリー), as this is so popular...
https://finance.yahoo.co.jp/quote/0331418A
eMAXIS Slim 全世界株式（オール・カントリー）は分配金を出していません。
No Dividends are paid out.

LSI

We commited Lump Sum of Y200,000 invested in the eMaxis at 05 Feb 22 price, Y16,093.
We know the Average Price. It's 05 Feb 22 price, Y16,093
We know how many units there are. It's Y200,000 / 05 Feb 22 price, 16,093 = 12.42776 Units.

05-Feb-2022 Y200,000 / price Y16,093 = 12.42776 Units.

Value as of 05-Mar-2022:
12.42776 Units x Price, Y15,547 = Y193,214.38 = -3.39%

Value as of 05-Apr-2022:
12.42776 Units x Price Y17,110 = Y212,638.9736 = +6.32%

Value as of 05-May-2022:
12.42776 Units x Price Y16,561 = Y205,816.13 = +2.9%

Value as of 05-June-2022:
12.42776 Units x Price Y16,799 = Y208,773.94 = +4387%

Value as of 05-July-2022:
12.42776 Units x Price Y15,973 = Y198,508.61 = -0.7457%


DCA

And I will put my Y200,000 cash into the eMaxis Slim AW starting 05 Feb 22, Y10,000, and Y10,000 on the 5th. day of every month (or the previous working day) for the next 19 months, and then, at the end of January 2024 we compare the result.

05-Feb-2022 Y10,000 / price Y16,093 = 0.62138 Units.
05-Feb-2022 Y190,000 in the bank at 0% Interest.
05-Feb-2022 Total 0.62138 Units

Value as of 05-Feb-2022:
0.62138 Units x Price, Y16,093 + 190,000 = Y200,000 = 0%

05-Mar-2022 Y10,000 / price Y15,547 = 0.64321 Units
05-Mar-2022 Y180,000 in the bank at 0% Interest.
05-Mar-2022 Total 1.26459 Units

Value as of 05-Mar-2022:
1.26459 Units x Price, Y15,547 + 180,000 = Y199,660.59 = -0.1697%

05-Apr-2022 Y10,000 / price Y17,110 = 0.58445 Units
05-Apr-2022 Y170,000 in the bank at 0% Interest.
05-Apr-2022 Total 1.84904 Units

Value as of 05-Apr-2022:
1.84904 Units x Price Y17,110 + 170,000 = Y201,637.135 = +0.8185%

05-May-2022 Y10,000 / price Y16,561 = 0.6038 Units
05-May-2022 Y160,000 in the bank at 0% Interest.
05-May-2022 Total 2.4528 Units

Value as of 05-May-2022:
2.4528 Units x Price Y16,561 + 160,000 = Y200,621.9514 = +0.311%

05-June-2022 Y10,000 / price Y16,799 = 0.5952 Units
05-June-2022 Y150,000 in the bank at 0% Interest.
05-June-2022 Total 3.048 Units

Value as of 05-June-2022:
3.048 Units x Price Y16,799 + 150,000 = Y201,204.5872 = +0.6023%

05-July-2022 Y10,000 / price Y15,973 = 0.626 Units
05-July-2022 Y140,000 in the bank at 0% Interest.
05-July-2022 Total 3.674 Units

Value as of 05-July-2022:
3.674 Units x Price Y15,973 + 140,000 = Y198,685.704 = -0.657%


And again, the third scenario:

My Alter Ego will one day decide to invest another Y200,000 Lump-Sum at the time of my choosing, sometime between now and the end of January 2024. Until then, the Y200,000 of dry powder sits in the bank at 0% Interest...

I will commit to making this investment when the Shiller S&P P/E falls to a more reasonable level, and I will give advanced notice, so you would not be able to accuse me of hind-sight...

https://www.multpl.com/shiller-pe

Not Yet. Currently planning on September/October 2022. Subject to change...

Watch This Space...

[TBS]

...

Call it splitting hairs, but again a mistake has slipped into the numbers. This time it is with VOO - you've missed the end of June dividend.

Although it was not specifically Tkydon's "experiment", it is the six month mark now. Six months is often proposed as a "good" term for dollar cost averaging, so let's look at how things did specifically over this period. Looking eMAXIS Slim All Country as the numbers are easy. DCA under-performed LSI by 1.45% over the last six months.

DCA also would have under-performed if you'd chosen 5, 4 or 3 month terms to spread the investments. It is only over 2 months when DCA would have come out on top, due to the price drop from Feb to Mar 2022.

The difference in the outcome between the two strategies has been small so far. This is intuitively correct as yen-based markets have been volatile but broadly flat over the past six months. But this isn't the main point, this is: how many people would have predicted this outcome six months ago? Not many, I bet. It is just another demonstration of how humans are intrinsically bad at predicting short-term market trajectories. Even the noisy ones on internet forums . Sometimes they get lucky, but that's not been the case so far in this thread.

[Bubblegun]

...

Call it splitting hairs, but again a mistake has slipped into the numbers. This time it is with VOO - you've missed the end of June dividend.

Although it was not specifically Tkydon's "experiment", it is the six month mark now. Six months is often proposed as a "good" term for dollar cost averaging, so let's look at how things did specifically over this period. Looking eMAXIS Slim All Country as the numbers are easy. DCA under-performed LSI by 1.45% over the last six months.

DCA also would have under-performed if you'd chosen 5, 4 or 3 month terms to spread the investments. It is only over 2 months when DCA would have come out on top, due to the price drop from Feb to Mar 2022.

The difference in the outcome between the two strategies has been small so far. This is intuitively correct as yen-based markets have been volatile but broadly flat over the past six months. But this isn't the main point, this is: how many people would have predicted this outcome six months ago? Not many, I bet. It is just another demonstration of how humans are intrinsically bad at predicting short-term market trajectories. Even the noisy ones on internet forums . Sometimes they get lucky, but that's not been the case so far in this thread.

Keep up the good work. Right now I'm increasing the DCA. Infact ive decided to to drop in 2000 yen every single time one clears.So I'm probably gonna end up using my yearly NISA allowance faster now. and I've been doing that with the kids JNISA as well. Sadly, it just doesn't seem enough.
No idea if this is going to be worth. As we don't know where the markets going.or where it will be next year or for how long.

[RMA]

Good experiment! I look forward to see the results every month. I personally believe Tkydon is on right track here. One should DCA in the downtrend and lumpsum in the uptrend keeping an eye on the fundamentals. In my opinion, DCA which will beat lumpsum in this experiment if he changes from DCA to lumpsum for the balance funds as soon as the Fed pivots and until then keep DCA'ing.

Also want to add that during current scenerio, market is in downtrend and dollar is gaining strength because of Fed policy so the DCA guy should keep the balance cash in Dollars instead of keeping the same in Yen. It can be easily achieved through by forex trading like buy dollar short yen and earn interest on the same.

[TBS]

Keep up the good work. Right now I'm increasing the DCA. Infact ive decided to to drop in 2000 yen every single time one clears.So I'm probably gonna end up using my yearly NISA allowance faster now. and I've been doing that with the kids JNISA as well. Sadly, it just doesn't seem enough.
No idea if this is going to be worth. As we don't know where the markets going.or where it will be next year or for how long.

I think you are over-complicating things. The dates/amounts of your investments so far aren't clear, but given the market has been higher on more days than it has not since you first opened this thread, it is likely you would have been better off putting what you've invested so far in as a lump sum back on Feb 5th. It would have been a much smaller time commitment as well.

What trajectory the markets go on from now, who knows? It is interesting that two of the market timing advocates are now in disagreement about what will happen. Tkydon thinks the yen will strengthen again, while RMA says it will continue to weaken. Which to believe?

Or just ignore it, it's all just noise.

[TokyoBoglehead]

Well if you really want DCA flexibility Monex has you covered.

You can set a daily DCA.

z

Or you can set a Total monthly amount to be DCA`d that includes a monthly bonus.

Of course these are Trusts, not ETFs. It would save you a lot of time too.

[Bubblegun]

Well, it seems the S&P500 sale is back on.
We had a dip for about 6 month sale followed by a new rally for a month. Certainly interesting to see how long the sale will continue. I’m still dropping in regular amounts every week, no matter what the price!
For every pundit that says it’s doom and gloom, there are pundits who think the other.
I’ve certainly been aware of emotions there. This is then I wish I was like Spock or Data from Star Trek.highly illogical things.