AI stocks will dominate 2025. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I know someone who has made more than 200% from NVIDIA. I'll also take any other recommendations you make.
I think the next big thing will be A.I. For enduring growth akin to META, it's vital to avoid impulsive decisions driven by short-term fluctuations. Prioritize patience and a long-term perspective consider financial advisory for informed buying and selling decisions.
Facing a similar situation, I sought advice from an advisor. Through portfolio restructuring and diversification with good ETFs, S&P 500 and growth stocks, I've turned my portfolio around from $200k to over $800k in a few years.
Your advisor must be really good, I hope it's okay to inquire if you're still collaborating with the same advisor and how I can get in touch with them?
I really want to get in with a financial advisor this year, especially as all markets are hitting highs. I don't want to be too optimistic and end up losing everything.
DIANA CASTEEL LYNCH has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Completely disagree. Some of your logic is incorrect. You said DCA would lose you money because the market tend to go up. That's just mathematically wrong. You don't lose any money, you just gain less than if you put all the money in at the start. The point of DCA is to reduce risk, but at the cost of reducing gain as well. It's good for volatile stocks where price fluctuate 15 to 30% a week like Tesla for example. If you dump all your money at the peak of TSLA stock, you might see a loss for months. DCA would guarantee you make steady gain.
I've always thought of DCA for putting in what you can afford each month to win over time more so then taking a large sum of money and spreading that out over time. Two different things in my mind. Go all in with all the cash you want to invest now then DCA each month going forward.
I put halve of my normal investments amount every 15 days and if the market goes down I double the amount. If the market crash very bad I have a savings ready to go into the market to do massive buys.
I DCA through payroll deductions every two weeks. I’ve been doing it for years. Very happy. When I have a large sum I usually invest all of it immediately. Again I’m happy with we’re I’ve ended up
Or put in your initial investment in a tactical time, which could be now, compared to the 60k top. Dont invest blindly and then dca, wait for the market, then start your plans, in this case, the difference would you almost made 2btc already.
Poor description of what dollar cost averaging is trying to achieve on several levels: a) DCA is supposed to reduce the risk of losing money. It is natural to expect a reduction in P/L if you take lower risk (no free lunch after all). All discussions that do not consider risk are unfortunately flawed. Please provide a reference that shows DCA underperforms on a risk adjusted basis. b) DCA can be applied over vastly different intervals and for different purposes. If you want to average in the market over several years, it is obvious that the market is expected to move up and one could miss on higher profits due to lower exposure. But if you want to average over a day-week (i.e., guarantee that you buy close to VWAP) then market direction is essentially random. If you want to reduce exposure to significant market risks (e.g., FED tapering, interest rate changes, covid, etc.) you can DCA over several months. If a company has an unproven business model, spreading purchases over multiple quarters is a viable strategy to increase exposure gradually as the company proves itself and becomes less risky. DCA generally is a very useful tool to deal with various kinds uncertainty.
I don't think you're thinking about DCA right, it's not primarily about the mathematical effectiveness of it , although maximal time of dollar invested is a good way to get close to optimal, it's about avoiding psychological threats to the investment. It's like how you can better lose weight and get in shape if you have a set routine and stick to it. Or how a bunch of principles outline the scientific method to produce better science with less interference from personal bias. The ideal trader and investor would be the guy who always get it right, dunno if he exists but certainly lots of people seem to get it wrong almost every time and THOSE people will always benefit from a strict plan almost whatever it is, and DCA is one of the most straight forward ones to get a routine going and to ease people out of obsessing about price movements. I have a friend who bought Tesla at something like 550 and then it went to 900 and back down to 650 and he panic-sold and was rather happy to get out having made a profit, same guy also owned a series of overly conservative and stagnant companies for 10 years before that making almost no return on them. He would benefit immensely from DCAing, if it would let him get into more volatile investments and stay in them during dips. If you are a nervous overthinker or a non-thinker, DCA will help protect you from yourself and your dumb descisions.
I dont think the purpose of DCA is to reduce the risk of losing money, but rather to reduce volatility... which I guess is good because some people cant handle volatility and might sell at the wrong time. Also, to some people, DCA is a psychological benefit. But there's been research that shows that just investing whatever money you have is better in the long run than DCA (as mentioned in the video). And, if you assume that the market goes up in the long term, then this makes sense and should not be too difficult to understand.
Fully agree. DCA is a way to reduce risk and of course that will cost you something. Saying that DCA is a bad investment strategy is completely a complete misunderstanding of the objective of DCA. The stock market fluctuates a lot and DCA has been proven to be a very effective way of risk reduction for low costs. DCA is basically buying the dip, and there are a lot of dips.
@@DeusExAstra I agree with you. People need to understand that when we talk about risk in the context of investment, it really means volatility; it does NOT mean the risk of losing money.
@@frankwiersma7980 DCA does not reduce the risk because sooner or later it becomes a Pic anyway. Your cash income will no longer be able to average the price and you will only have wasted time and money
Honestly, this situation makes me uneasy, especially with the economic uncertainty. With talk of a potential downturn, not just a recession, I'm unsure about my $130K investment strategy and whether investing in the best ETFs for 2024 is the right move.
I agree. Even with great opportunities, we should proceed cautiously. Seeking market analysis or advice from certified market strategists is important.
Absolutely, having a solid plan is crucial. My portfolio has doubled since early last year. My financial advisor and I are working towards a seven-figure goal, though it might take until Q3 2024.
You will be able to do this for a short period of time, then when the sum will be high, your daily cash will be useless to average the price and at that point it will in effect be a lump sum
Vanguard did a study in 2014 i think where they found that in MOST instances, lump sum investing wins out in the long run, but not by a huge amount...obviously this only applies to index/etf investors though. The issue with individual stocks is that you have to consistently be right in your picks over a very long time, which shifts the odds out of your favour, compared to following the overall market which on average goes up. Obviously there are always the arguments of "if you invested on this day right before this huge crash if would take 10+ years to get back to your initial investment amount" however- this always assumes that you then never invest again after that initial lump sum...
Yeah, I think the summary towards the end of the video, that Sasha calls "DCA on steroids", is essentially the same as investing in index funds. What I mean is that you can do a bunch of hard work and research into which companies should be best-performing or have what you think may be the best chances of being on sale right now, but investing in an index that follows, for example, the S&P500 basically does this already, because companies are moved in and out of that index over time automatically rather than having to do all that research yourself. Of course, all the normal caveats apply, such as, "Sure, but if I do my own research /and I happen to be right/ (a.k.a. lucky), then I'll do better by doing my own research. But ... it's nearly impossible to do the level of high-quality picking over the long-haul, which is why actively managed funds have been shown not to do better. It would be a safe conclusion, I think, that the professionals who pick stocks will do better than me picking stocks on average ... if that was a strategy that worked for long-term retirement savings ... but why do all the work when investing in the index is basically putting your trust into the market itself rather than a much more narrow subset of the market such as picking individual stocks?
only if you are lucky and happened to bought the shares at good times without actually knowing you are doing it. this is why DCA is better on the long run to avoid the risk of volatility.
@Ro-xo3sy ir that you have a crystal ball and know when the bottom will be reached and when the crash will happen in the first place. DCA makes great assumptions that you can make consistent actions that predict what the market or stock will do. This has never been done successfully because it is fundamentally impossible. One thinks because they were lucky a couple times in a row that they will continue to be in the future. Also even if you are lucky a few times on timing, this doesn't necessarily mean the math will be superior to early lump sum. Take the opinion out and look at the data and statistics and you will see DCA is not a useful method for 99% of investors.
Tell that to those who recently bought Nasdaq in ATH all in one shot recently just because “mathematically” market goes up. DCA is not meant to maximize your gains, but to minimize risk. DCA works well when market is overvalued, and yes, in the long term market will go up, but you never want to buy all in one shot in a overvalued market.
Right now you are a lot better to dca when all time high ETF and sp500 close to all time high. When the sp500 is lower definitely dum sum. But you have to be a fool to think the market always goes up... I'm 35 years old and I have already seen 4 massive crises that wipe out more life than that guy has ever seen. Dca is protection
I'm new to this so forgive me if this is a dumb question. I understand the concept behind DCA when it comes to buying, but what about selling? You're technically making money if your buys go up in price over time, but that's not liquid cash that you can buy things with. It's assets. So is DCA just to build assets and just to buy? The concept doesn't apply to selling, does it? If you're just buying and buying and buying every month, at what point do you decide is the time to sell your assets for liquid cash that you can use to buy a car, for example? Again, I'm very new to investing but all the advice I've been hearing is about buying. And i see people on RUclips who have like 100k in their investment portfolio, for example, but it's tied up there. If they sold it all and brought a supercar, they'd have 0 funds in their portfolio. They are basically asset rich but cash poor. They've got 100k of assets but driving a 10 year old car.
I do a weighted dollar cost average. I contribite every Friday a small amoint. I add to it if stock goes below 200 day moving average....a little more if below 500...etc
Doesn’t matter about maths - it depends on attitude to risk and most people will sacrifice a little bit of return to reduce risk. DCA is not a bad strategy.
If you manage buying at or near the 52 week low, you can choose to drop 1000 on that stock confidently, but I personally drop 100 first and watch it for a week or so before I bump it. Usually a dip happens when the market opens, sometimes around lunch. Other lists im waiting for the stock to drop 20-50%, because if the shares are low that 1000 bucks will buy more shares. So thats always a good time to Go Big.
The dollar cost averaging strategy is a great problem to have in my opinion. Fact is timing the market is impossible so it is better to have time in the market than time it! And what is more, you’ll never lose the pick up on discounted stocks when there is heavy market volatility, 🙌🏻 🚀 💵
DCA is a concept that you can use in your investing stategy and eventually twist according to your needs in terms of timing amounts per time based on current asset value or decline percentage etc... but the point here is that it might not fit everyone as it requires years of patience as well as doing a thorough due diligence at the beginning and a review overtime. So patience and study time are mandatory, just like for any other investment strategy
I still think dca is good but not to blindly do it every set period of time but only if the prices go down compared to your starting buy price. And if this doesn't happen then you don't buy again. In such a case you can't lose because the price went up and you made money!
I'll give you another example, I max out both my IRA and Roth IRA accounts as quickly as possible at the start of a new year. Even if it means I have 0 salary for a few months. I do this by saving before the year end enough to last me those 0 income months (and to max out roth ira on day 1). I think it made a big difference.
The maximum contribution limit to all IRAs per person a year is 6000( unless over 50). You can’t contribute 6000 to both an IRA and a Roth IRA within the same year. You could do 3000 in one and 3000 in the other if you wanted to do that for some reason but not 12k total. I would double check your contributions.
By dollar cost averaging you're reducing the risk of "buying on the top"; this comes at the price of missing out on gains on average. If you're averse of risk and have relatively short timeframe it might make sense to do it?
@@SashaYanshin I agree in the very short-term. I should elaborate on my definition of short-term; around 5-10 years. In this timeframe it might make sense?
@@ashepe Still carries risk - e.g. if you want to buy a house with that money and you then hit a market crash, you won't like it. On average, DCA'ing a lump sum over a long-period of time into the market will lose you money. That's the simple fact. But sure - it reduces the risk of volatility.
@@SashaYanshin I totally agree that it's the wrong decision on average mathematically. I only compare it to putting all your chips in the middle on the poker table with Aces; mathematically it's the decision, but you'd might not bring all of your savings to that table on that one occasion. Might be a wrong analogy 😛
Is the stock market designed to grow and why? 3:00 If I were to a month from now we’re to say the stock market will go up how likely would I be? 4:00 Is it better to put it in the S&P 500? 3:00
Unless you're investing in the Venezuelan stock market, or Argentine stock market, or the Mozambique stock market, this is all w/ the assumption you're investing in Anglo-saxon, english speaking, European majority countries.
Completely disagree with your opinion. People that choose to DCA decides to reduce their risk for their capital and not to optimize the investment. People that choose to DCA is having the view that market will go up in average. Or else they won’t invest at all. People that choose to DCA because they do not want to subject to behavioral bias and avoid wrong call when affect them. DCA is not to optimized return even the view is market is going up more than down on average. They mainly do it to overcome their their behavioral bias and true to “low risk low return”, people that DCA do not expect to make higher return than those with lump sum investment. That’s not their goal. Their goal is able to sleep well at night, stay optimistic it will eventually work out and it’s okay to make a bit less!
Question to you guys, whats the difference between selling it now and buying when its lower.. vs dca? For Example, lets say i bought X at 50 and im thinking of selling it at a loss. Curent price of X is 40.. now whats the difference besides losing $10 if i sell my sol at $40 and buying at a lower price (lets assume that the current price is $30). Wouldnt it be better to do that i instead of DCAing since there is less risk on losing more? Im not sure if this makes sense and if the math is right, that is why im asking and maybe people can answer this question. Would love to know the opinion of you guys in here and if you happen to read this then may he can give an opinion on this? (Not advice, just opinion on my current thinking) In summary: What’s the difference if i sell now at a loss and buy at a lower price vs DCA? wouldnt it be a less risk if i sell at a loss and buy back at a much lower price to get back those loss instead of dcaing when i know that the price will keep going down anyway?
So you did, sorry. Rewatched the video. I think DCAing every month on payday into a global ETF is a very different thing to building a position in a company that you feel is undervalued though. There's kind or a line where it can become buying the dip...which is also a good idea but something different. Just say here thinking of how I do things
The market is not designed to always go up. The US stock market has done so but there are many other markets that has not. A good question would be why has the US stock market behaved like that and will it continue to do so in the future. Then you propose a plan that you call dollar average but it is not. Maybe you are confused. Picking a subset of stocks from a larger basket that trade lower is not dollar cost average. It rather looks like timing the market, but again it is not that either.
A lot of assumptions here, first is that you can afford to pay in a lump some equal to you yearly contributions and that the price when I come to sell is always going to be higher. DCA works and has reduced risk than lump sum investing, It also reduces some of the financial barriers that face many average retail investors.
i don't agree, because DCA benefits only if the market grows overtime. DCA has no advantage of buying the dip, it's simply trying to take advantage of the market fluctuation whether it goes up or down. and trying to sell some time later when the market crazily going up that usually caused by hype..
I think we are not taking risk into account. By going all in with a lump sum, you’re very exposed to volatility or a crash. All depends on how soon you’ll need access to the money.
I saw probably a dozen videos all saying how fantastic the DCA strategy is. Your video is the only one I saw showing both sides of the coin. Thanks for sharing your thoughts.
A lot of people get it very wrong because they blindly apply that strategy. Dollar Cost Averaging is a very good strategy if you are investing in index fund, diversified ETFs. Also for people who do not have time to read the financial news, they do not know how to read the chart. But if you are investing in individual stock and If you know the knife is falling why would you try to catch it rather than wait for a while until they settle on the floor, bottom.
What happens is that people don't have a lot of money lying around, so with each check they buy a share. This can work. I would not DCA into high risk stuff, but if it works those guys become wealthy. But, some lose a lot too.
I think the critics of this video are missing the main point he makes which is sound. Accepting that he means earn less rather than lose, his logic is right.
Surely the majority of people get paid monthly. These people are looking to invest in the markets will invest on the day that they get paid, on a monthly basis. This is Dollar Cost Averaging, is it not? You describe this at 6:29. Yet your title states that DCA is bad. So the alternative is what, to save your money and dump it all in the market at the same time? Feel like your descriptions are skewed. I see you're attempting to say, don't hold your money you want to invest and split it over a certain period... so if I had 500 per month, don't split it into £125 per week? Then your description at 8:58 pretty much discusses trying to time the market and the dips in particular stocks. Surely the overall principle here is time in the market beats timing the market. Strange vid
From my pov your strategy depends on how intrested and how much time do you have for investing, if you do this full time, probably there are better strategies than instantly putting money in as you get your paycheck, if you don't want to allocate a. lot of time ..yes this is a solution
You’ve completely missed an important element of dollar cost averaging and that is that the same amount must be invested every single time on a consistent basis. That way when the market is high you buy less and when the market is low you buy more. It’s not just about spreading your money out. This second part is very important
@@SashaYanshin Well I thought heard you say if you have 500 then, put that, then in another week you have 300 put that. maybe I missed it. All in all you have a good video there but the distinction is an important one
Investing the same amount over time doesnt do anything for improving your returns, it just helps with reducing volatility. In fact, if you follow the practice of always investing a set amount, then presumably you will often have more than that and you will have money you're not investing. So not only are you not investing all the available money at the start, you're also now not investing all the available money each additional time period. You will just end up with more and more money uninvested... which will reduce your long-term returns and make it more likely you will spend that extra money. Basically, DCA sucks any way you look at it, except for the psychological benefits for people who cant handle volatility and need a fixed plan they can stick to.
@@DeusExAstra as much as you can invest as soon as you can invest, then repeat, is by far the best strategy. The point of DCA is indeed to reduce volatility.
Hello Sir! How are you? I don't understand how to explain the matter 1st/ Let's say the price of a share was 20$. I bought 5 shares for 20$ 2nd/ The share price fell to $15. At 15$ I bought 6.66 shares 3rd/ Then after falling again to 10$ I bought 10 shares at 10$ 4th/ Then it came down to 7$ from here too. At 7$ I bought 14.28 shares again 5th/ From here the last came down to 5$ after that I bought 25 shares for 5$ The question is, the last price has dropped to $5 from the first price I bought, now the question is how to dca between the first and last price, so that the dca price is close to the last price. Please tell me I will be very helpful! Similarly from opposite side, how to DCA between last and first price so that first price is close Now the question is that the price I bought at fast has gone down to last price now tell me a process to do BCA between fast and last so that it is close to last price t plz Just as it has gone from above to the last price, if you do DCA between the last pass and the above price, it should be close to the last price that has gone up.
Agree with his point. I want to clarify some areas that could be misleading. Also, this is my understanding, feel free to correct me if you think Im wrong, When he said lose money with DCA when market goes up, you arent literally losing money, you are just gaining less profit as compared to a lump sum investment. Similarly when the market goes down, you acquire less losses compared to a lump sum investment, but you are still losing money. So on a whole the traditional DCA serves as a safety net to minimize losses, while also limiting gains. His method of DCA is more like value investing. You "DCA" by diversifying your investments into different companies which, by your judgement, are undervaluing their stocks due to market circumstances. This way you get to reap all the large gains from several "lump sum investments".
“The market will grow” I agree, is it mainly because the purchasing power of our dollar goes down? For example Kyle Bass once said “Zimbabwe’s stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs.” How do we protect against only the nominal price going up? What we really want is an increased purchasing power in a portfolio, correct?
As a statistician, Sasha is spot on with this video. The market generally increases; 100 years have proven this. Two basic cases; 1. If the market increases as per normal, DCA will net you less than investing the total at time 0. (If you are happy to wear this and lower the risk then go for it, BUT, you are implicity betting the market will go lower. So it's contrarian) . 2. The market declines over each future buying interval. This has you "averaging down"..one of the worst mistakes you can make. It's where the statement "paying good money after bad" originated. What I will add here is the best things to do is 1. Pyramid (averaging up) for profits and 2. Use stop losses. Over 15 years in the market through multiple crashes has performed brilliantly.
Hi, what I find more than not is when the market is high, websites including youtube encourage you to invest the lump sum, but when the market is near or at the bottom of a bear market you get a lot of websites and RUclipsrs encouraging you to do DCA. how strange? A better way to think about this is using a financial calculator or spreadsheet and comparing the two methods. one should also think about bear markets and how long the average length is, and how big they are on average. one should have a plan in place for taking advantage of one, if when they happen.
Excellent video. Dabbled with DCA and value averaging for many years. Bad, bad idea & lots of regrets. Abandoned this approach as indeed 2 out of 3 times, lump sums trumps DCA.
The reason that dca performs better than waiting for a bottom & buying on the way down, is that you are missing out on all the growth the market made while you waited. This is because it usually takes so long for that to happen & so much growth has occurred in the meantime, that it outweighs any gains made by buying the dip (this was proven to be true even if an investor could find the exact bottom every time). What you are suggesting is really trying to find a loophole so you can say “i am not waiting for a bottom, i am staying in the market the whole time”. But you are in fact doing the opposite, just on a different scale. You are waiting on individual stocks to be at a dip and missing out on all their individual growth. It’s exactly the same issue. Your strategy will have the same negative effect.
And what about if you have serious money from house sale etc like £400k, would you still just throw it all in right now knowing we are in an everything bubble that really does feel like it's going to pop? The last 3 years has been brutal and 6.2% garanteed savings bond 1 year is looking very attractive right now
I think you misunderstand the purpose of DCA. It isn’t to maximize returns, it is to minimize risk, which it does very effectively. Of course, mathematically speaking, putting as much as you can in all at once will cause the greatest returns, but that isn’t the purpose of dollar cost averaging. People are emotional creatures who want to hedge their bets against sudden downturns, which DCA does. Furthermore, if you invest according to DCA, you’re isolating for variables like timing and greater market movements and just betting purely on the long term performance of your respective asset.
Average return is not all that matters -- this analysis misses the aspect of variance. Just because average return on dollar cost averaging is worse it doesn't imply directly that dollar cost averaging is bad -- the variance of dollar cost averaging is smaller (because it's spread over time) and therefore it's a smaller risk i.e. you are more likely to get the return that is closer to the expected return. Bulk investment is more risky -- you may get more or lose more. It seems to me, please correct me if I'm wrong, that dollar cost averaging is still better if what you care about is reducing risk.
Thanks for making this video. Very needed. This is how I have invested for some time. A mix of DCA and Opportunism among your favoured stocks :) I have always wondered about the DCA and not really come to grips with it. It always felt non logical most of the time. Nice to know that a savvy investor like you use the same "method" as I do, which to me is not really a method, but common sense. Again, much needed video.
Do you have a video on how YOU analyze YOUR stocks and shares? I’ve watched a fair few other people’s but I’m a fan of the way you explain things and your point of view in general. Many thanks
In my humble opinion, I think in DCA there is no white or black , the best version is the grey version when you mix lump sum with dollar cost averaging. Let me explain: you can lump sum every determined consistent period of investing, that way you dollar cost average but you don't spread your money you just throw in what you have right now, as Sasha said. So the two terms are intertwined together and are easy to mix for what they really mean. Just put every period what you have and watch Netflix. Great video.
If you lump sum at low points, you will most likely in the short term have better growth, however, DCA protects against crashes and bear markets, and since there are overall way more all time highs, than low points, DCA actually outperforms lump sum investing slightly over time. The reality is you should just invest as much as you can, as soon as you can, and DCA works better for most people who cant afford to invest much.
I dont completely agree either. Some stocks may go down for a couple of years. Chances are overwhelming that you will not time the bottom. You will have to wait longer to break even if it ever comes back up.
DCA is the most powerful investment technique there is, especially in the emerging Crypto market. You can do it daily, weekly, bi-weekly, monthly and even yearly. Considering compound interest, it's amazing the stack you can build over the next three years by doing this. I personally do this daily. The crypto market is volatile, so it's hard to figure out where Bitcoin is going to be the next day. In order for this to work, you have to have faith in the market.
Your not looking at risk and psychology of money. Money isn’t about math but psychology. It’s not timing the market at all. Horrible advice for most investors
I look at risk a lot - it's literally what I've done for most of my career. And psychology is all fun and games in the short term, but long-term outcomes are driven by numbers. That's the beauty of long-term investing.
@@SashaYanshin if you play it wrong it an destroy your psychology with money and never want to enter the market again. psychology is super important for money either long or short
If you have 200$ a month to,spend on investing dca is not a bad strategy at all, even better if you learn how to read charts. Also dca can be used to get closer to zero if you’re at a loss with a certain stock , buying at he low price.
You did not discuss what to do when the stocks you purchased before, goes down from your purchase price. You just mentioned, the next purchase would be stocks that are discounted at the moment. Based on your explanation, is seems like you are not doing DCA, you are picking up discounted stocks. Also, say when you have the funds, what if there are NO stocks that are discounted (from your list), which means you are waiting and accumulating funds to deploy, meaning timing the market. I might be wrong, but I don't think you explained/addressed DCA properly. Just my 2 cents.
I invest dollar cost average but I cherry pick when I buy my crypto. I watch for the price to dip and for support levels then buy within that bracket knowing that over time it will go back up. I'm up 55.45 ROI.
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Completely agree with you: this special DCA is also what some grest investors do, however its double difficult from the stamima and company analysis point ov view. Many thanks!
I think there's a very important point you're missing. Maximum average return is not what everyone should be aiming for. Sure, on average, you should invest it all now and let the money work for you for as long as possible, and this works in instances where you don't need the money eventually. But in reality for most people what is most important is, atleast when investing a sizeable chunk all at once, risk adjusted return. It's all well and good having a higher average return by what, 4%? If dumping it all in at once instead of buying over a year. However the higher average return is not going to feed your retirement when you invest and then the market drops 50% over the next month, as you said yourself, setting you back for years. I don't disagree that if you had an infinite amount of money, or literally no need for it ever, that the 'dump it all now' strategy produces the best average returns. But that completely disregards any actual need for the money or the fact that average returns are no good if you get stuck with the massive loss
What happens on ‘average’ in the market does not matter for the individual investor. The individual investor only gets to experience one version of what happens in the market. They dont get to experience all the things that happen in the market and get an average outcome of those events. You either win or you lose. Simple as that. DCA works especially well in volatile market such as crypto and especially more so during a bearish market where you dollar cost average down because the upside is much greater.
Bro, you don't even know what Dollar Cost Averaging is. At 2:25 you claim it's "buying the dip." DCA is NOT the same as "buying the dip." Haha. To quote investopedia: "Dollar-cost averaging involves investing the same amount of money in a target security at regular intervals over a certain period of time, REGARDLESS of price." The best way to invest is to buy the dip at IRREGULAR intervals based on price action. Just make sure you're buying an asset worth holding in the long term. I HIGHLY suggest buying BTC at the market lows. BTC makes it easy to 'buy the dip' because the market lows and highs come on a 4 year cycle, and are easy to predict for a long term 'buy the dip' strategy. Do the same with ETH, and some alt-coins, (taking the money from those gains and buying more BTC during the cycle-low) and you'll be set for life.
Sasha, what would you advise if you get a very large lump sum of money. Would you still put that all into the stock market, following the principle of DCA? or keep some liquid, i guess incase there is a crash in the market.??? If and when things drop, if you don't have any money to invest, it unfortunate to lose that opportunity to further invest. Your advise?
Don't know what you did with your large lump sum but I would never go all in for the reason that you state - you miss the opportunity of buying more for less when the market falls. Anyone who'd put all their cash into an SP500 ETF at the end of December '21 would be sitting on a loss now as it's not returned to its all time high for the whole of the year (to date).
If you DCA and are in for the long-haul does it matter? The whole idea of DCA is about getting the benefit of a crash or dips. Holding money in the hope of a crash is a mistake as you cannot predict a crash. We know for the last 100 years that after a crash their is a rebound. Dollar cost averaging just allows you to buy cheap stock daily after a crash that is surely good investing strategy. If lets say we crash next week and have a bear or flat market for the next 5 years then DCA will reap the rewards; If its up and down after a crash then dollar cost average allows you to get the average position. If after a crash the rebound is quick and you end up back to your original position in a few months then you will still be no worse off. So i disagree with you. Anyone predicting a crash good luck!
This logic never makes sense because it always supposes you have the abilities to front load a payment. So by that logic you’ve had to save that money up instead of investing it to be able to then front load a payment, meaning you missed out of potential gains before your front load payment that you could’ve had by just investing all along. The only way in which this is practical is if you’ve just been gifted a large sum of money or gotten a bonus and have a large chunk to invest. Otherwise it doesn’t add up
Great content, as always! A bit off-topic, but I wanted to ask: I have a SafePal wallet with USDT, and I have the seed phrase. (air carpet target dish off jeans toilet sweet piano spoil fruit essay). Could you explain how to move them to Binance?
For the average layperson, Isn’t your ‘DCA on steroids’ just putting money into ETFs (eg one the Vanguard ETF offerings or Lifestrategy products or other organisation offering ETFs) whenever you have surplus cash to invest? The ETF is doing the hard work of selecting and balancing and removing the high risk of picking your own stocks which the average person is usually very weak at.
Absolutely! With regards to DCA I would also like to mention it may sometimes worth opening a new position in different account rather DCA example you have 200 shares at £15and it goes down to 9. You can only spend 300. Such a little amount in comparison to your initial position will not DCA effectively. It worth opening a new position in different account with super cheap cost bases. It had worked out for me well.
DCA is not market timing it's a way to use general volatility it only works in a short period of time maybe up to a couple of months. The dude in the video just misunderstood the whole concept. The idea is to buy the average price in a short time period if you spread it out over more months or even years you are just trying to do market timing and that dosen't work
I dont think that investing aa you can should not be called DCA at all. Its the exact same logic as lump sum if you come into a chunk of money. Both ate putting your money in as early as you can.
Dollar cost averaging mitigates the majority of volatility & uncertainty in the long term. During a recession or period of economic downturn dollar cost averaging is more competent than lump sum investing
Sasha, you need to come up with a easy to remember name for your site. I can remember Sasha but usually don’t remember your last name when searching for the site or recommending it to others.
Not an expert but I think most of us can agree that the bear market low was in around New Year's 2022/2023. Imagine if you had been DCA all around the peak and all the way down....You would have been fucking wrecked. You can't time the market but the longer the timeframe, the better your educated your decisions will be. So glad I ignored the tsunami of FUD videos (they are a sign of a market bottoming out) and threw down hard in January and February. To me, the biggest weakness of DCA strategy is how it ignores real-world events and technical data.
Based on your theory, I have accumulated a large amount of money because I didn't know how investing works. With that large amount of money , would you just put it right away into the market? And then progressively add any new money into the market?
AI stocks will dominate 2025. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I know someone who has made more than 200% from NVIDIA. I'll also take any other recommendations you make.
I think the next big thing will be A.I. For enduring growth akin to META, it's vital to avoid impulsive decisions driven by short-term fluctuations. Prioritize patience and a long-term perspective consider financial advisory for informed buying and selling decisions.
Facing a similar situation, I sought advice from an advisor. Through portfolio restructuring and diversification with good ETFs, S&P 500 and growth stocks, I've turned my portfolio around from $200k to over $800k in a few years.
Your advisor must be really good, I hope it's okay to inquire if you're still collaborating with the same advisor and how I can get in touch with them?
I really want to get in with a financial advisor this year, especially as all markets are hitting highs. I don't want to be too optimistic and end up losing everything.
DIANA CASTEEL LYNCH has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Completely disagree. Some of your logic is incorrect. You said DCA would lose you money because the market tend to go up. That's just mathematically wrong. You don't lose any money, you just gain less than if you put all the money in at the start. The point of DCA is to reduce risk, but at the cost of reducing gain as well. It's good for volatile stocks where price fluctuate 15 to 30% a week like Tesla for example. If you dump all your money at the peak of TSLA stock, you might see a loss for months. DCA would guarantee you make steady gain.
Completely agree with you.
I agree with you. Sasha knows a lot, but sounds like someone who has no personal experience with multiple markets
Agreed.
This aged well. Good thing I didnt lump some now DCAing but more than usual after all these📉. Even VTI and SPY close to their 52 week low.
@@AXELRAPUNZEL Could you be more specific about multiple markets statement?
I've always thought of DCA for putting in what you can afford each month to win over time more so then taking a large sum of money and spreading that out over time. Two different things in my mind. Go all in with all the cash you want to invest now then DCA each month going forward.
It's just a savings account, literally; and not a strategy.
I put halve of my normal investments amount every 15 days and if the market goes down I double the amount. If the market crash very bad I have a savings ready to go into the market to do massive buys.
I DCA through payroll deductions every two weeks. I’ve been doing it for years. Very happy. When I have a large sum I usually invest all of it immediately. Again I’m happy with we’re I’ve ended up
Or put in your initial investment in a tactical time, which could be now, compared to the 60k top. Dont invest blindly and then dca, wait for the market, then start your plans, in this case, the difference would you almost made 2btc already.
thank you! same thing I was saying
Poor description of what dollar cost averaging is trying to achieve on several levels:
a) DCA is supposed to reduce the risk of losing money. It is natural to expect a reduction in P/L if you take lower risk (no free lunch after all). All discussions that do not consider risk are unfortunately flawed. Please provide a reference that shows DCA underperforms on a risk adjusted basis.
b) DCA can be applied over vastly different intervals and for different purposes. If you want to average in the market over several years, it is obvious that the market is expected to move up and one could miss on higher profits due to lower exposure. But if you want to average over a day-week (i.e., guarantee that you buy close to VWAP) then market direction is essentially random. If you want to reduce exposure to significant market risks (e.g., FED tapering, interest rate changes, covid, etc.) you can DCA over several months. If a company has an unproven business model, spreading purchases over multiple quarters is a viable strategy to increase exposure gradually as the company proves itself and becomes less risky. DCA generally is a very useful tool to deal with various kinds uncertainty.
I don't think you're thinking about DCA right, it's not primarily about the mathematical effectiveness of it , although maximal time of dollar invested is a good way to get close to optimal, it's about avoiding psychological threats to the investment. It's like how you can better lose weight and get in shape if you have a set routine and stick to it. Or how a bunch of principles outline the scientific method to produce better science with less interference from personal bias. The ideal trader and investor would be the guy who always get it right, dunno if he exists but certainly lots of people seem to get it wrong almost every time and THOSE people will always benefit from a strict plan almost whatever it is, and DCA is one of the most straight forward ones to get a routine going and to ease people out of obsessing about price movements.
I have a friend who bought Tesla at something like 550 and then it went to 900 and back down to 650 and he panic-sold and was rather happy to get out having made a profit, same guy also owned a series of overly conservative and stagnant companies for 10 years before that making almost no return on them. He would benefit immensely from DCAing, if it would let him get into more volatile investments and stay in them during dips. If you are a nervous overthinker or a non-thinker, DCA will help protect you from yourself and your dumb descisions.
I dont think the purpose of DCA is to reduce the risk of losing money, but rather to reduce volatility... which I guess is good because some people cant handle volatility and might sell at the wrong time. Also, to some people, DCA is a psychological benefit. But there's been research that shows that just investing whatever money you have is better in the long run than DCA (as mentioned in the video). And, if you assume that the market goes up in the long term, then this makes sense and should not be too difficult to understand.
Fully agree. DCA is a way to reduce risk and of course that will cost you something. Saying that DCA is a bad investment strategy is completely a complete misunderstanding of the objective of DCA. The stock market fluctuates a lot and DCA has been proven to be a very effective way of risk reduction for low costs. DCA is basically buying the dip, and there are a lot of dips.
@@DeusExAstra I agree with you. People need to understand that when we talk about risk in the context of investment, it really means volatility; it does NOT mean the risk of losing money.
@@frankwiersma7980 DCA does not reduce the risk because sooner or later it becomes a Pic anyway. Your cash income will no longer be able to average the price and you will only have wasted time and money
Honestly, this situation makes me uneasy, especially with the economic uncertainty. With talk of a potential downturn, not just a recession, I'm unsure about my $130K investment strategy and whether investing in the best ETFs for 2024 is the right move.
I agree. Even with great opportunities, we should proceed cautiously. Seeking market analysis or advice from certified market strategists is important.
Absolutely, having a solid plan is crucial. My portfolio has doubled since early last year. My financial advisor and I are working towards a seven-figure goal, though it might take until Q3 2024.
Can you share details of your advisor? I want to invest my increased cash flow in stocks and alternative assets to achieve my financial goals.
Her name is Bonita Jeanette Rodriguez. You can easily find her information to arrange an appointment.
Thanks for sharing. I searched for her name and found her website. I reviewed her credentials and did my research before contacting her. Thanks again.
One of the few financial youtubers speaking the truth instead of repeating what's fashionable.
Thank you!
Well DCA works for me- I invest the same amount daily in 2 ETFs (bull and bear market) and it works wonders for me.
You will be able to do this for a short period of time, then when the sum will be high, your daily cash will be useless to average the price and at that point it will in effect be a lump sum
You’re confusing recurring buy with DCA swing entry/exit
Vanguard did a study in 2014 i think where they found that in MOST instances, lump sum investing wins out in the long run, but not by a huge amount...obviously this only applies to index/etf investors though. The issue with individual stocks is that you have to consistently be right in your picks over a very long time, which shifts the odds out of your favour, compared to following the overall market which on average goes up. Obviously there are always the arguments of "if you invested on this day right before this huge crash if would take 10+ years to get back to your initial investment amount" however- this always assumes that you then never invest again after that initial lump sum...
Yeah, I think the summary towards the end of the video, that Sasha calls "DCA on steroids", is essentially the same as investing in index funds. What I mean is that you can do a bunch of hard work and research into which companies should be best-performing or have what you think may be the best chances of being on sale right now, but investing in an index that follows, for example, the S&P500 basically does this already, because companies are moved in and out of that index over time automatically rather than having to do all that research yourself.
Of course, all the normal caveats apply, such as, "Sure, but if I do my own research /and I happen to be right/ (a.k.a. lucky), then I'll do better by doing my own research. But ... it's nearly impossible to do the level of high-quality picking over the long-haul, which is why actively managed funds have been shown not to do better. It would be a safe conclusion, I think, that the professionals who pick stocks will do better than me picking stocks on average ... if that was a strategy that worked for long-term retirement savings ... but why do all the work when investing in the index is basically putting your trust into the market itself rather than a much more narrow subset of the market such as picking individual stocks?
only if you are lucky and happened to bought the shares at good times without actually knowing you are doing it. this is why DCA is better on the long run to avoid the risk of volatility.
@Ro-xo3sy ir that you have a crystal ball and know when the bottom will be reached and when the crash will happen in the first place. DCA makes great assumptions that you can make consistent actions that predict what the market or stock will do. This has never been done successfully because it is fundamentally impossible. One thinks because they were lucky a couple times in a row that they will continue to be in the future. Also even if you are lucky a few times on timing, this doesn't necessarily mean the math will be superior to early lump sum. Take the opinion out and look at the data and statistics and you will see DCA is not a useful method for 99% of investors.
Tell that to those who recently bought Nasdaq in ATH all in one shot recently just because “mathematically” market goes up. DCA is not meant to maximize your gains, but to minimize risk. DCA works well when market is overvalued, and yes, in the long term market will go up, but you never want to buy all in one shot in a overvalued market.
Right now you are a lot better to dca when all time high ETF and sp500 close to all time high.
When the sp500 is lower definitely dum sum.
But you have to be a fool to think the market always goes up... I'm 35 years old and I have already seen 4 massive crises that wipe out more life than that guy has ever seen.
Dca is protection
I'm new to this so forgive me if this is a dumb question.
I understand the concept behind DCA when it comes to buying, but what about selling? You're technically making money if your buys go up in price over time, but that's not liquid cash that you can buy things with. It's assets.
So is DCA just to build assets and just to buy? The concept doesn't apply to selling, does it?
If you're just buying and buying and buying every month, at what point do you decide is the time to sell your assets for liquid cash that you can use to buy a car, for example?
Again, I'm very new to investing but all the advice I've been hearing is about buying. And i see people on RUclips who have like 100k in their investment portfolio, for example, but it's tied up there. If they sold it all and brought a supercar, they'd have 0 funds in their portfolio. They are basically asset rich but cash poor. They've got 100k of assets but driving a 10 year old car.
Great question leaving this comment so I can read an answer
I do a weighted dollar cost average. I contribite every Friday a small amoint. I add to it if stock goes below 200 day moving average....a little more if below 500...etc
Doesn’t matter about maths - it depends on attitude to risk and most people will sacrifice a little bit of return to reduce risk. DCA is not a bad strategy.
If you manage buying at or near the 52 week low, you can choose to drop 1000 on that stock confidently, but I personally drop 100 first and watch it for a week or so before I bump it. Usually a dip happens when the market opens, sometimes around lunch. Other lists im waiting for the stock to drop 20-50%, because if the shares are low that 1000 bucks will buy more shares. So thats always a good time to Go Big.
Dollar cost averaging when the trend is down like our bear market, and lump sum averaging when the market is in an uptrend
The dollar cost averaging strategy is a great problem to have in my opinion. Fact is timing the market is impossible so it is better to have time in the market than time it! And what is more, you’ll never lose the pick up on discounted stocks when there is heavy market volatility, 🙌🏻 🚀 💵
DCA is a concept that you can use in your investing stategy and eventually twist according to your needs in terms of timing amounts per time based on current asset value or decline percentage etc... but the point here is that it might not fit everyone as it requires years of patience as well as doing a thorough due diligence at the beginning and a review overtime. So patience and study time are mandatory, just like for any other investment strategy
I still think dca is good but not to blindly do it every set period of time but only if the prices go down compared to your starting buy price. And if this doesn't happen then you don't buy again. In such a case you can't lose because the price went up and you made money!
Agreed. Invest when the price goes down.
Smart! One of the most important rules of investing is to understand the psychology of investing
I'll give you another example, I max out both my IRA and Roth IRA accounts as quickly as possible at the start of a new year. Even if it means I have 0 salary for a few months. I do this by saving before the year end enough to last me those 0 income months (and to max out roth ira on day 1). I think it made a big difference.
The maximum contribution limit to all IRAs per person a year is 6000( unless over 50). You can’t contribute 6000 to both an IRA and a Roth IRA within the same year. You could do 3000 in one and 3000 in the other if you wanted to do that for some reason but not 12k total. I would double check your contributions.
By dollar cost averaging you're reducing the risk of "buying on the top"; this comes at the price of missing out on gains on average. If you're averse of risk and have relatively short timeframe it might make sense to do it?
If you are averse to risk and have a short time frame, I would posit that you should not be putting that money in the stock market.
@@SashaYanshin I agree in the very short-term. I should elaborate on my definition of short-term; around 5-10 years. In this timeframe it might make sense?
@@ashepe Still carries risk - e.g. if you want to buy a house with that money and you then hit a market crash, you won't like it.
On average, DCA'ing a lump sum over a long-period of time into the market will lose you money. That's the simple fact. But sure - it reduces the risk of volatility.
@@SashaYanshin I totally agree that it's the wrong decision on average mathematically. I only compare it to putting all your chips in the middle on the poker table with Aces; mathematically it's the decision, but you'd might not bring all of your savings to that table on that one occasion. Might be a wrong analogy 😛
Is the stock market designed to grow and why? 3:00
If I were to a month from now we’re to say the stock market will go up how likely would I be? 4:00
Is it better to put it in the S&P 500? 3:00
Unless you're investing in the Venezuelan stock market, or Argentine stock market, or the Mozambique stock market, this is all w/ the assumption you're investing in Anglo-saxon, english speaking, European majority countries.
Completely disagree with your opinion.
People that choose to DCA decides to reduce their risk for their capital and not to optimize the investment.
People that choose to DCA is having the view that market will go up in average. Or else they won’t invest at all.
People that choose to DCA because they do not want to subject to behavioral bias and avoid wrong call when affect them.
DCA is not to optimized return even the view is market is going up more than down on average. They mainly do it to overcome their their behavioral bias and true to “low risk low return”, people that DCA do not expect to make higher return than those with lump sum investment. That’s not their goal.
Their goal is able to sleep well at night, stay optimistic it will eventually work out and it’s okay to make a bit less!
The problem is that dca simply shifts the exact same risk further forward in time and don't reduce the risk
Agreed! There is also the discount rate that is used in finance that says a dollar today is worth more than a dollar tomorrow
Question to you guys, whats the difference between selling it now and buying when its lower.. vs dca?
For Example, lets say i bought X at 50 and im thinking of selling it at a loss. Curent price of X is 40.. now whats the difference besides losing $10 if i sell my sol at $40 and buying at a lower price (lets assume that the current price is $30). Wouldnt it be better to do that i instead of DCAing since there is less risk on losing more? Im not sure if this makes sense and if the math is right, that is why im asking and maybe people can answer this question. Would love to know the opinion of you guys in here and if you happen to read this then may he can give an opinion on this? (Not advice, just opinion on my current thinking)
In summary:
What’s the difference if i sell now at a loss and buy at a lower price vs DCA? wouldnt it be a less risk if i sell at a loss and buy back at a much lower price to get back those loss instead of dcaing when i know that the price will keep going down anyway?
I DCA because I get paid monthly not annually.
I talk about that in the second half of the video 👍
So you did, sorry. Rewatched the video. I think DCAing every month on payday into a global ETF is a very different thing to building a position in a company that you feel is undervalued though. There's kind or a line where it can become buying the dip...which is also a good idea but something different. Just say here thinking of how I do things
This was a confusing video. At 8:45 He explained that he does dollar cost averages, except it's on steroids. So the title is misleading.
Agree. Timing the market is impossible. Timing individual stocks is possible
The market is not designed to always go up. The US stock market has done so but there are many other markets that has not. A good question would be why has the US stock market behaved like that and will it continue to do so in the future. Then you propose a plan that you call dollar average but it is not. Maybe you are confused. Picking a subset of stocks from a larger basket that trade lower is not dollar cost average. It rather looks like timing the market, but again it is not that either.
It's basd on the cost of money.,.. if they're just debasing currency then we'll see results from that as well.
A lot of assumptions here, first is that you can afford to pay in a lump some equal to you yearly contributions and that the price when I come to sell is always going to be higher.
DCA works and has reduced risk than lump sum investing, It also reduces some of the financial barriers that face many average retail investors.
i don't agree, because DCA benefits only if the market grows overtime. DCA has no advantage of buying the dip, it's simply trying to take advantage of the market fluctuation whether it goes up or down. and trying to sell some time later when the market crazily going up that usually caused by hype..
I think we are not taking risk into account. By going all in with a lump sum, you’re very exposed to volatility or a crash. All depends on how soon you’ll need access to the money.
I saw probably a dozen videos all saying how fantastic the DCA strategy is. Your video is the only one I saw showing both sides of the coin. Thanks for sharing your thoughts.
I've made a spreadsheet with all prices for Crypto and plugged in DCA. DCA turns out to be the worst performance compared to risk/reward ratio.
Interesting. Is that by a significant percentage?
A lot of people get it very wrong because they blindly apply that strategy. Dollar Cost Averaging is a very good strategy if you are investing in index fund, diversified ETFs. Also for people who do not have time to read the financial news, they do not know how to read the chart.
But if you are investing in individual stock and If you know the knife is falling why would you try to catch it rather than wait for a while until they settle on the floor, bottom.
What happens is that people don't have a lot of money lying around, so with each check they buy a share. This can work.
I would not DCA into high risk stuff, but if it works those guys become wealthy. But, some lose a lot too.
I think the critics of this video are missing the main point he makes which is sound. Accepting that he means earn less rather than lose, his logic is right.
Surely the majority of people get paid monthly. These people are looking to invest in the markets will invest on the day that they get paid, on a monthly basis. This is Dollar Cost Averaging, is it not? You describe this at 6:29.
Yet your title states that DCA is bad.
So the alternative is what, to save your money and dump it all in the market at the same time?
Feel like your descriptions are skewed. I see you're attempting to say, don't hold your money you want to invest and split it over a certain period... so if I had 500 per month, don't split it into £125 per week?
Then your description at 8:58 pretty much discusses trying to time the market and the dips in particular stocks.
Surely the overall principle here is time in the market beats timing the market.
Strange vid
From my pov your strategy depends on how intrested and how much time do you have for investing, if you do this full time, probably there are better strategies than instantly putting money in as you get your paycheck, if you don't want to allocate a. lot of time ..yes this is a solution
You’ve completely missed an important element of dollar cost averaging and that is that the same amount must be invested every single time on a consistent basis. That way when the market is high you buy less and when the market is low you buy more. It’s not just about spreading your money out. This second part is very important
I literally talk about this in the second half of the video
@@SashaYanshin Well I thought heard you say if you have 500 then, put that, then in another week you have 300 put that. maybe I missed it. All in all you have a good video there but the distinction is an important one
Investing the same amount over time doesnt do anything for improving your returns, it just helps with reducing volatility. In fact, if you follow the practice of always investing a set amount, then presumably you will often have more than that and you will have money you're not investing. So not only are you not investing all the available money at the start, you're also now not investing all the available money each additional time period. You will just end up with more and more money uninvested... which will reduce your long-term returns and make it more likely you will spend that extra money. Basically, DCA sucks any way you look at it, except for the psychological benefits for people who cant handle volatility and need a fixed plan they can stick to.
@@DeusExAstra as much as you can invest as soon as you can invest, then repeat, is by far the best strategy. The point of DCA is indeed to reduce volatility.
Hello Sir! How are you? I don't understand how to explain the matter
1st/
Let's say the price of a share was 20$.
I bought 5 shares for 20$
2nd/
The share price fell to $15.
At 15$ I bought 6.66 shares
3rd/
Then after falling again to 10$
I bought 10 shares at 10$
4th/
Then it came down to 7$ from here too.
At 7$ I bought 14.28 shares
again
5th/
From here the last came down to 5$ after that
I bought 25 shares for 5$
The question is, the last price has dropped to $5 from the first price I bought, now the question is how to dca between the first and last price, so that the dca price is close to the last price.
Please tell me I will be very helpful!
Similarly from opposite side, how to DCA between last and first price so that first price is close
Now the question is that the price I bought at fast has gone down to last price now tell me a process to do BCA between fast and last so that it is close to last price t plz
Just as it has gone from above to the last price, if you do DCA between the last pass and the above price, it should be close to the last price that has gone up.
Correct.dca means buying at a higher prices than lower prices because the market goes up most of the time..
It’s simple but I felt people need to understand it better - get surprised at the number of questions.
Agree with his point. I want to clarify some areas that could be misleading. Also, this is my understanding, feel free to correct me if you think Im wrong,
When he said lose money with DCA when market goes up, you arent literally losing money, you are just gaining less profit as compared to a lump sum investment. Similarly when the market goes down, you acquire less losses compared to a lump sum investment, but you are still losing money. So on a whole the traditional DCA serves as a safety net to minimize losses, while also limiting gains.
His method of DCA is more like value investing. You "DCA" by diversifying your investments into different companies which, by your judgement, are undervaluing their stocks due to market circumstances. This way you get to reap all the large gains from several "lump sum investments".
“The market will grow” I agree, is it mainly because the purchasing power of our dollar goes down? For example Kyle Bass once said “Zimbabwe’s stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs.”
How do we protect against only the nominal price going up? What we really want is an increased purchasing power in a portfolio, correct?
I would dollar cost average when having a pile of cash if i'm "catching a falling knife".
As a statistician, Sasha is spot on with this video. The market generally increases; 100 years have proven this. Two basic cases; 1. If the market increases as per normal, DCA will net you less than investing the total at time 0. (If you are happy to wear this and lower the risk then go for it, BUT, you are implicity betting the market will go lower. So it's contrarian) . 2. The market declines over each future buying interval. This has you "averaging down"..one of the worst mistakes you can make. It's where the statement "paying good money after bad" originated.
What I will add here is the best things to do is 1. Pyramid (averaging up) for profits and 2. Use stop losses. Over 15 years in the market through multiple crashes has performed brilliantly.
Hi, what I find more than not is when the market is high, websites including youtube encourage you to invest the lump sum, but when the market is near or at the bottom of a bear market you get a lot of websites and RUclipsrs encouraging you to do DCA. how strange?
A better way to think about this is using a financial calculator or spreadsheet and comparing the two methods. one should also think about bear markets and how long the average length is, and how big they are on average. one should have a plan in place for taking advantage of one, if when they happen.
it depends on what asset you are investing in, in the long term dca is a good accumulation strategy
I DCA on SPY everytime the price falls and create support, i buy. Another way to do DCA , buy If the price falls on major moving average.
Excellent video. Dabbled with DCA and value averaging for many years. Bad, bad idea & lots of regrets. Abandoned this approach as indeed 2 out of 3 times, lump sums trumps DCA.
Great video 👌
The reason that dca performs better than waiting for a bottom & buying on the way down, is that you are missing out on all the growth the market made while you waited. This is because it usually takes so long for that to happen & so much growth has occurred in the meantime, that it outweighs any gains made by buying the dip (this was proven to be true even if an investor could find the exact bottom every time).
What you are suggesting is really trying to find a loophole so you can say “i am not waiting for a bottom, i am staying in the market the whole time”.
But you are in fact doing the opposite, just on a different scale. You are waiting on individual stocks to be at a dip and missing out on all their individual growth. It’s exactly the same issue. Your strategy will have the same negative effect.
And what about if you have serious money from house sale etc like £400k, would you still just throw it all in right now knowing we are in an everything bubble that really does feel like it's going to pop?
The last 3 years has been brutal and 6.2% garanteed savings bond 1 year is looking very attractive right now
I think you misunderstand the purpose of DCA. It isn’t to maximize returns, it is to minimize risk, which it does very effectively. Of course, mathematically speaking, putting as much as you can in all at once will cause the greatest returns, but that isn’t the purpose of dollar cost averaging. People are emotional creatures who want to hedge their bets against sudden downturns, which DCA does. Furthermore, if you invest according to DCA, you’re isolating for variables like timing and greater market movements and just betting purely on the long term performance of your respective asset.
Average return is not all that matters -- this analysis misses the aspect of variance. Just because average return on dollar cost averaging is worse it doesn't imply directly that dollar cost averaging is bad -- the variance of dollar cost averaging is smaller (because it's spread over time) and therefore it's a smaller risk i.e. you are more likely to get the return that is closer to the expected return. Bulk investment is more risky -- you may get more or lose more. It seems to me, please correct me if I'm wrong, that dollar cost averaging is still better if what you care about is reducing risk.
Thanks for making this video. Very needed. This is how I have invested for some time. A mix of DCA and Opportunism among your favoured stocks :) I have always wondered about the DCA and not really come to grips with it. It always felt non logical most of the time. Nice to know that a savvy investor like you use the same "method" as I do, which to me is not really a method, but common sense. Again, much needed video.
Do you have a video on how YOU analyze YOUR stocks and shares? I’ve watched a fair few other people’s but I’m a fan of the way you explain things and your point of view in general. Many thanks
Quite a few videos on specific stocks and will of course be doing more too. 👍
In my humble opinion, I think in DCA there is no white or black , the best version is the grey version when you mix lump sum with dollar cost averaging. Let me explain: you can lump sum every determined consistent period of investing, that way you dollar cost average but you don't spread your money you just throw in what you have right now, as Sasha said. So the two terms are intertwined together and are easy to mix for what they really mean. Just put every period what you have and watch Netflix. Great video.
What is the best choice if don’t have a lump some though?
I cover that in the video too… Investing continuously over time is a proven winning strategy 👍
If you lump sum at low points, you will most likely in the short term have better growth, however, DCA protects against crashes and bear markets, and since there are overall way more all time highs, than low points, DCA actually outperforms lump sum investing slightly over time. The reality is you should just invest as much as you can, as soon as you can, and DCA works better for most people who cant afford to invest much.
I dont completely agree either. Some stocks may go down for a couple of years. Chances are overwhelming that you will not time the bottom. You will have to wait longer to break even if it ever comes back up.
DCA is the most powerful investment technique there is, especially in the emerging Crypto market. You can do it daily, weekly, bi-weekly, monthly and even yearly. Considering compound interest, it's amazing the stack you can build over the next three years by doing this. I personally do this daily. The crypto market is volatile, so it's hard to figure out where Bitcoin is going to be the next day. In order for this to work, you have to have faith in the market.
Your not looking at risk and psychology of money. Money isn’t about math but psychology. It’s not timing the market at all. Horrible advice for most investors
I look at risk a lot - it's literally what I've done for most of my career. And psychology is all fun and games in the short term, but long-term outcomes are driven by numbers. That's the beauty of long-term investing.
@@SashaYanshin if you play it wrong it an destroy your psychology with money and never want to enter the market again. psychology is super important for money either long or short
If you have 200$ a month to,spend on investing dca is not a bad strategy at all, even better if you learn how to read charts. Also dca can be used to get closer to zero if you’re at a loss with a certain stock , buying at he low price.
DCA is not market timing. You continually invest at
Regular intervals without fail. That said, lump sum is generally more desirable.
You did not discuss what to do when the stocks you purchased before, goes down from your purchase price. You just mentioned, the next purchase would be stocks that are discounted at the moment. Based on your explanation, is seems like you are not doing DCA, you are picking up discounted stocks. Also, say when you have the funds, what if there are NO stocks that are discounted (from your list), which means you are waiting and accumulating funds to deploy, meaning timing the market.
I might be wrong, but I don't think you explained/addressed DCA properly. Just my 2 cents.
Ok you give an if investing in May 2020 post crash but if you put your lump sum in on February 2020 before any crash
For divendend stocks i get it but what about stocks with no dividends
I invest dollar cost average but I cherry pick when I buy my crypto. I watch for the price to dip and for support levels then buy within that bracket knowing that over time it will go back up. I'm up 55.45 ROI.
Completely agree with you: this special DCA is also what some grest investors do, however its double difficult from the stamima and company analysis point ov view. Many thanks!
I think there's a very important point you're missing.
Maximum average return is not what everyone should be aiming for.
Sure, on average, you should invest it all now and let the money work for you for as long as possible, and this works in instances where you don't need the money eventually.
But in reality for most people what is most important is, atleast when investing a sizeable chunk all at once, risk adjusted return.
It's all well and good having a higher average return by what, 4%? If dumping it all in at once instead of buying over a year. However the higher average return is not going to feed your retirement when you invest and then the market drops 50% over the next month, as you said yourself, setting you back for years.
I don't disagree that if you had an infinite amount of money, or literally no need for it ever, that the 'dump it all now' strategy produces the best average returns. But that completely disregards any actual need for the money or the fact that average returns are no good if you get stuck with the massive loss
Do you think a stock paying 3.5% dividend yield has a better risk adjusted return than the S&P 500 index returning 9% (dividends plus growth)?
@@SashaYanshin depends on time scale
Edit: plus obviously things like the actual standard deviation and total returns of both assets
What happens on ‘average’ in the market does not matter for the individual investor. The individual investor only gets to experience one version of what happens in the market. They dont get to experience all the things that happen in the market and get an average outcome of those events. You either win or you lose. Simple as that. DCA works especially well in volatile market such as crypto and especially more so during a bearish market where you dollar cost average down because the upside is much greater.
Bro, you don't even know what Dollar Cost Averaging is. At 2:25 you claim it's "buying the dip." DCA is NOT the same as "buying the dip." Haha. To quote investopedia: "Dollar-cost averaging involves investing the same amount of money in a target security at regular intervals over a certain period of time, REGARDLESS of price."
The best way to invest is to buy the dip at IRREGULAR intervals based on price action. Just make sure you're buying an asset worth holding in the long term. I HIGHLY suggest buying BTC at the market lows. BTC makes it easy to 'buy the dip' because the market lows and highs come on a 4 year cycle, and are easy to predict for a long term 'buy the dip' strategy. Do the same with ETH, and some alt-coins, (taking the money from those gains and buying more BTC during the cycle-low) and you'll be set for life.
Why not to choose a dynamic/enhanced DCA? Increasing or multiplying your money input at different levels of down or up trends?
Sasha, what would you advise if you get a very large lump sum of money. Would you still put that all into the stock market, following the principle of DCA? or keep some liquid, i guess incase there is a crash in the market.??? If and when things drop, if you don't have any money to invest, it unfortunate to lose that opportunity to further invest. Your advise?
Don't know what you did with your large lump sum but I would never go all in for the reason that you state - you miss the opportunity of buying more for less when the market falls. Anyone who'd put all their cash into an SP500 ETF at the end of December '21 would be sitting on a loss now as it's not returned to its all time high for the whole of the year (to date).
So valuation doesn't matter?
If you DCA and are in for the long-haul does it matter? The whole idea of DCA is about getting the benefit of a crash or dips. Holding money in the hope of a crash is a mistake as you cannot predict a crash. We know for the last 100 years that after a crash their is a rebound. Dollar cost averaging just allows you to buy cheap stock daily after a crash that is surely good investing strategy.
If lets say we crash next week and have a bear or flat market for the next 5 years then DCA will reap the rewards; If its up and down after a crash then dollar cost average allows you to get the average position. If after a crash the rebound is quick and you end up back to your original position in a few months then you will still be no worse off. So i disagree with you.
Anyone predicting a crash good luck!
The trick to dca is consistency. Do it every week without fail and over months and years you will come out on top
This logic never makes sense because it always supposes you have the abilities to front load a payment. So by that logic you’ve had to save that money up instead of investing it to be able to then front load a payment, meaning you missed out of potential gains before your front load payment that you could’ve had by just investing all along. The only way in which this is practical is if you’ve just been gifted a large sum of money or gotten a bonus and have a large chunk to invest. Otherwise it doesn’t add up
Great content, as always! A bit off-topic, but I wanted to ask: I have a SafePal wallet with USDT, and I have the seed phrase. (air carpet target dish off jeans toilet sweet piano spoil fruit essay). Could you explain how to move them to Binance?
For the average layperson, Isn’t your ‘DCA on steroids’ just putting money into ETFs (eg one the Vanguard ETF offerings or Lifestrategy products or other organisation offering ETFs) whenever you have surplus cash to invest? The ETF is doing the hard work of selecting and balancing and removing the high risk of picking your own stocks which the average person is usually very weak at.
This is a very interesting video thanks. I would be interested to hear your thoughts on using DCA in very short term trading, e.g. the forex market.
Exactly! DCA is market timing…which sucks. On average, the market goes up so get on the ride ASAP!
Absolutely!
With regards to DCA I would also like to mention it may sometimes worth opening a new position in different account rather DCA example you have 200 shares at £15and it goes down to 9. You can only spend 300. Such a little amount in comparison to your initial position will not DCA effectively. It worth opening a new position in different account with super cheap cost bases.
It had worked out for me well.
Yes it makes it look better on paper but as I'm sure you're aware, it makes no financial difference.
So dollar cost average in a bear market and don't dollar cost average in bullish market, in general.
DCA’ing on daily frequency is good to average the buying price. Binance got even an hourly basis DCA’ing
Over the long term, mathematically both of these versions are basically the same. Both of these versions are DCA.
In the second option you don't have a choice. That is the fundamental difference. Lump sum vs DCA whenever you have money to invest.
Do you have a list of stocks that you invest in, or that are on your watch list? Thanks.
DCA is not market timing it's a way to use general volatility it only works in a short period of time maybe up to a couple of months. The dude in the video just misunderstood the whole concept. The idea is to buy the average price in a short time period if you spread it out over more months or even years you are just trying to do market timing and that dosen't work
I dont think that investing aa you can should not be called DCA at all. Its the exact same logic as lump sum if you come into a chunk of money. Both ate putting your money in as early as you can.
Dollar cost averaging mitigates the majority of volatility & uncertainty in the long term.
During a recession or period of economic downturn dollar cost averaging is more competent than lump sum investing
Like now. Starting to DCA during this 📉
People started thinking this way because rates were like nearly 0
Sasha, you need to come up with a easy to remember name for your site. I can remember Sasha but usually don’t remember your last name when searching for the site or recommending it to others.
Not an expert but I think most of us can agree that the bear market low was in around New Year's 2022/2023. Imagine if you had been DCA all around the peak and all the way down....You would have been fucking wrecked.
You can't time the market but the longer the timeframe, the better your educated your decisions will be. So glad I ignored the tsunami of FUD videos (they are a sign of a market bottoming out) and threw down hard in January and February.
To me, the biggest weakness of DCA strategy is how it ignores real-world events and technical data.
True in a bull market. Like when you posted this.
Untrue in a bear market. Like now.
that last piece of advice was so simple but so wise
Based on your theory, I have accumulated a large amount of money because I didn't know how investing works. With that large amount of money , would you just put it right away into the market? And then progressively add any new money into the market?
Put everything you can spare into the market straight away. And repeat.
Your breakdown of tokenomics was incredibly insightful.
I miss last year when everyone thought stonks only go up 😢