https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/
tl;dr: buy the dip works in some very certain circumstances but by and large, DCA works better, 70% of the time, even spotting buy the dip omniscience.
My point in all of this is that Buy the Dip, even with perfect information, typically underperforms DCA. So if you attempt to build up cash and buy at the next bottom, you will likely be worse off than if you had bought every month. Why? Because while you wait for the next dip, the market is likely to keep rising and leave you behind.
What makes the Buy the Dip strategy even more problematic is that we have always assumed that you would know when you were at every bottom (you won’t). I ran a variation of Buy the Dip where the strategy misses the bottom by 2 months, and guess what? Missing the bottom by just 2 months leads to underperforming DCA 97% of the time! So, even if you are somewhat decent at calling bottoms, you would still lose in the long run.
Submitted February 05, 2019 at 11:28AM by unfixablesteve http://bit.ly/2Sb1N9p
