r/valueinvesting
Do you guys buy at one go or make a staggered entry
User asks the community about their preferred entry strategy: lump sum investing versus staggered dollar-cost averaging.
Basically the title.
I like to catch my falling knives slowly
My man!
Used to buy in one go thinking it's cheapest and could start to go up any time. Then I would run out of spare cash and be unable to add when it drops. Always put less than you want.
I agree. Yesterday was a GOOD SALE. I deployed 33% of my Stock pile of cash. If it dips again I will deploy another 20% and wait til my picks start to go up and deploy another 22%.
"But but time in the market.."
Some regard who lumpsummed on Thursday
A good sale, to levels not seen since last friday? They basically erased a week of gains?
Eh to be fair some stocks fell way more than others.
But if they are just talking about SPY then sure
Buying at once is the correct answer objectively.
Buying in over time is the correct answer psychologically.
For individual stocks I think it's closer to the opposite, it's definitely not objectively correct. The studies where it's objectively correct are in relation to diverse index funds.
When you see a low price on a stock the temptation can be to take a full position due to FOMO, but assuming you're interested in multiple stocks it makes sense to have dry powder as the stock market does frequently misprice to the downside, and your largest positions should be taken on stocks that are most irrationally priced to the downside. The challenge is distinguishing a genuine mispricing from a real deterioration in the underlying business.
i buy a tracker stock to curb my FOMO while i do my due diligence.
Once it is legit, i buy in 1/3rds.
\----
What is a tracker ? It is a a couple of shares of the company you are interested in. Peter Lynch used to do this to observe the company and to learn.
Why 1/3rds? In case bad things happen, or i make mistakes in my fair value calculation.
Yep that’s exactly what I do. Even when I sell, I will sell all but one share so I can keep tracking.
Slowly start adding.
I added around $10K yesterday.
I still have $35K of dry powder.
How long you have that cash? because you bought higher than it was in March
You should sell puts instead of doing a limit order. It’s the same thing that you do but with a premium
Generally in tranches.