Went in 10% of my assets today. How should I add the other 90%?
On pull backs?
All at once?
Other?
I read some research recently that basically concluded that, much against the prevailing wisdom of dollar-cost averaging over time, you were better off to just go in all at once. I seem to recall it was some folks at Vanguard, actually.
However, that’s really hard for humans to do, and you may feel better adding over time. My suggestion would be to identify the top 10 or 15 companies you want to own and just buy them. If you think you don’t want to buy full positions in each, then don’t. You can always up-size them over time. If you think the entire market is at a top and it will be cheaper next month, I’d still suggest not waiting. “Waiting for a better price” almost always guarantees you won’t get it. (I scoffed at FaceBook at $96… now it’s $215 or whatever…)
Me, I don’t have a hard time making a full position out of the gate (say, 2% or 5% or whatever of the entire portfolio), but I DO have trouble adding to a position that’s doing well. “But I’m paying more for it now!”, I tell myself. So I have to have a mindset of “rewarding” the companies that are doing well by buying more, and that also works.
Anyway, can’t find the original research paper, but there are plenty of news articles referring to it, such as https://money.usnews.com/money/personal-finance/mutual-funds… … Google is your friend (search for “invest over time or all at once”).
6 Likes
I scoffed at FaceBook at $96… now it’s $215 or whatever…
I thought it was too high at $40. But the real reason I didn’t buy it was that I never use it. Another poor reason.
I DO have trouble adding to a position that’s doing well…So I have to have a mindset of “rewarding” the companies that are doing well by buying more.
I too much prefer adding to stocks that are going up than going down.
Saul
4 Likes
I too much prefer adding to stocks that are going up than going down.
To be clear on what I meant by that it was
I, too, much prefer adding to stocks that are going up than going down.
or
I, also, much prefer adding to stocks that are going up than going down.
and I wasn’t meaning to say “too much.”
1 Like
I am no expert but I too dumped everything in pretty quickly. Recently I’ve found that it might behoove one to keep a 10%-20% cash stash to buy on the dips. Haha, I’ve created a cash stash twice in the last month and spent it the day before each dip.
It taught me that a cash stash can be useful if you don’t get too greedy. Also, watching these tech stocks I seem to see a pattern of dipping and jumping on various events happening in the political/international arenas. I doubt this is going to end even as the market climbs to new highs. Wow, I sound like an Analyst. Super grain of salt.
3 Likes
I like to start a position at half of what I intend to fully purchase. When I intend to own 100 shares in a company, I will start with 50, then add another 25 shares twice more at future dates once the company displays good results/returns. For me, that definition of good results is that the stock must be beating the S&P 500 by 10%.
50-25-25 is not a hard and fast rule for me just my personal varition on the popular buy 3 times at 33.3% each time to get to a full position.
I agree with the Motley Fool to add to your winners.
Thanks
Foolingyou1
1 Like
Totally outlawed by the (great) rules so no replies whatsoever or I’ll be sent into exile: recall learning at school about use of the comma or semi-colon: ‘King Charles walked and talked half an hour after his head was cut off.’.
1 Like