Dollar Cost Averaging / Mortgages / ISAs

[trendie]

ISAs and other "unit trust" type vehicles rely on buying a value amount of units on a regular basis. ( eg; £100 per month )
These vehicles are used to pay of mortgages,etc.

The theory behind them is that, in the long run, the markets will rise, and that, in general, the average value of your units should be greater than the amount you paid for them.

I was thinking, that the dollar-cost-averaging principle is sound, up to a point.

But, knowing Technical Analysis, as we do, would it not make sense to accelerate the principle, by buying more units when the market dips below the 200-MA, for example.
And continue buying as normal when above.

Over the long run, you may end up buying more in some years, but as the markets rise, you will have bought more at the lower prices.

Would this work ?
NB: this to be applied to indices and tracker-type funds only, not specific shares, which can go to zero.

 

[HairyMoose]

I'm trying dollar cost averaging using spread betting as my platform.
I haven't been religious in putting money in and buying regularly.
It flattens out your potential gain and loses.

 

[rsh01]

Is this lulz? Er...no....er, hmm, pass.

 

[HairyMoose]

Is this lulz? Er...no....er, hmm, pass.

I've been wondering who this Lulz character is ?
It turns out he's more of a what than a who.

Lulz is laughter at someone else's expense (from the German concept of "Schadensfreude"). Sometimes you may see the word spelled as luls or lolz if the writer doesn't know what they're talking about. Lulz is said to be engaged in by Internet users who have witnessed one major economic/environmental/political disaster too many, and who thus view a state of voluntary, gleeful sociopathy over the world's current apocalyptic state.
It is not a substitute for lol.
If you want an idea of what lulz is, consider A Streetcar Named Desire and The Simpsons. With the former, think of what Stanley Kowalski "tells" Blanche Dubois after he exposed her true past to her suitor and tore down all of Blanche's fantasies. He, in her face, yelled "HAA HAA!" With the latter, consider Nelson Muntz's "ha ha!" laugh. Both Stanley Kowalski and Nelson Muntz are having "lulz."

 

[trendie]

http://www.trade2win.com/boards/stocks/193084-investing-growth.html

("Investing for Growth" by countrydj)


I didnt want to derail the above new thread, but it reminded me of an idea that I never actually followed up on.

I will, over the course of a couple of weeks, see if I had done this, what a bog-standard tracker would have resulted in, and what my idea would have resulted in.

 

[malaguti]

I will, over the course of a couple of weeks, see if I had done this, what a bog-standard tracker would have resulted in, and what my idea would have resulted in.

will you also be attempting to apply your original criteria?

But, knowing Technical Analysis, as we do, would it not make sense to accelerate the principle, by buying more units when the market dips below the 200-MA, for example.

I'd be intrigued by the results, and more so how you might apply this criteria and where your data would come from to chart the unit trust.
Very recently I'm looking at diversifying my portfolio to include index type tracked funds along with the quota of shares which is my norm

 

[trendie]

will you also be attempting to apply your original criteria?

But, knowing Technical Analysis, as we do, would it not make sense to accelerate the principle, by buying more units when the market dips below the 200-MA, for example.

I'd be intrigued by the results, and more so how you might apply this criteria and where your data would come from to chart the unit trust.
Very recently I'm looking at diversifying my portfolio to include index type tracked funds along with the quota of shares which is my norm

I will use an index-tracker as the vehicle, so will use FTSE, US30, etc.
The reason being, as per original idea, they can't go to zero, unlike stocks.
Would be easier to see, if the idea has potential.
What would be a good "buying" point?
Last Friday of the month?
A particular date? eg, 28th of the month, and next logical trading day if closed.
How does an index-tracker get bought?

 

[malaguti]

I will use an index-tracker as the vehicle, so will use FTSE, US30, etc.
The reason being, as per original idea, they can't go to zero, unlike stocks.
Would be easier to see, if the idea has potential.
What would be a good "buying" point?
Last Friday of the month?
A particular date? eg, 28th of the month, and next logical trading day if closed.
How does an index-tracker get bought?

I see just using the overall index. I was thinking of index related but more diverse. Lets say an index tracker of emerging markets, or even just pharma related which isn't charted as its a mixture of UK pharma and US etc etc

That said (and with my limited knowledge) you buy units of a fund don't you? Your broker will offer various products which you can invest in and your £10,000 buys you 100 units for example.
your job is now being able to assess the value of 100 units from date A to B

 

[Jack o'Clubs]

why not use investment trusts? You get the additional kicker there that when the market is weak they often trade at (sometimes large) discounts to NAV, and at premiums when the market is strong. Use Trustnet for source info on UK ITs.

 

[malaguti]

why not use investment trusts? You get the additional kicker there that when the market is weak they often trade at (sometimes large) discounts to NAV, and at premiums when the market is strong. Use Trustnet for source info on UK ITs.

How is this different though?
If I look at an investment trust such as Schroder UK growth, which is a mixture of UK sectors, so is an index tracker.
One index tracker only differs from another, based on their specific sector weigtings.

Honestly, I have no idea and am only investigating this after years of just shares..

 

[Jack o'Clubs]

No, they're very different (and ITs much misunderstood and underowned as a consequence). An investment trust is launched via an IPO and has a fixed amount of capital that invests in a portfolio. The NAV of the fund goes up and down according to its investments (this is what has it has in common with a tracker or unit trust / mutual fund). But, the key difference is that there are a fixed number of shares that investors buy or sell on an exchange, as a consequence the price of the shares can vary from the value of the underlying investments. When markets crap out, or a particular style of fund is out of favour it can trade at a significant discount to the investments it owns. And vice versa, a hot IT can trade at a premium. This is different to a tracker or unit trust which liquidate or buy assets to meet redemptions or new money and so the fund value is always equivalent to the NAV.

You can make money on ITs just by trading the discounts / premia, but as a long term investor it makes huge sense to use ITs if you like to buy cheap and sell dear because you literally get something for nothing when an IT trades at a discount to NAV.