Lux Investing
Better Concept of Dollar or Value Cost averaging?
i was observing Dollar cost or value cost averaging for a long period of time. I invented a better way. Dollar cost averaging- Says Invest fixed amount every month/period, eventually leads buying more at lows, but less at highs. Value cost averaging- Says invest fixed amount every month/period, sell if increase value, dont invest if its increased equivalent for next month proportion., if it reduces dont stop buying- this will leads- buying more when its low, selling when its high I invested RYDEX-Venture-Velocity Fund-Concept(these 2 are exactly oppositely/inversly correlated 2times(twice) to qqqq Every month or period- RYDEX venture falls invest- next month if rydex venture increased value, then implement value cost averaging for velocity.. This concept no financial book suggested. But does any one agree with me? Back tested? any hidden propblems in this concept? i want some one to share my ideas and thoughts.
Public Comments
- I assume that you mean the Rydex Dynamic S&P 500 Master Fund and the Rydex Inverse Dynamic S&P 500 Fund. The first is corrolated to 200% of the rise in the S&P 500 and the 2nd is corrolated to 200% of the drop in the S&P 500. I am not at all familiar with a Rydex Venture fund or a Rydex Velocity fund. One problem that I see is the fund expenses. They are substantial. 1.7% minimum. The other that I see is the leverage. It works against you as well as for you. In an extended bear market, you may loose a significant portion of your investment averaging. Look back at 1929. If your started averaging in a leveraged fund in October 1929, you would have been completely wiped out by 1933. The same thing would have happened in 1972. Also it is not clear to me when you would switch to the bear side from the bull side. Leverage can be a killer when the market goes against you. And with averaging, it will really kill you.
