4 Comments

Interesting thank you,the only point I would add Is to mix the same:for example I jave a dollar cost ave strategia and every time their Is a great drop I trybto invrease the monthly add when ther Is an High a decretare.Probaly this strategy Wins on all

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author

I agree. If one has additional funds in a severe dip, it definitely makes sense to double down. That's also something we can see when we look at the impact of the 2009 investment in this dataset.

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Dec 13, 2023Liked by Daniel

The definition of “the dip” here is chosen badly(and intended that way i think) and creates a bias against BTD strategy. The definition should select a timeframe. If the cost averager buys every first day of the month, the dipper should buy the dip of that month, not two years later. If the cost averager buys every first day (or middle, or last) of the year, the dipper should buy the dip of that year. This definition of the dip in your example creates a so bad dipper that the averager buys more dips than the dipper :)

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I agree with you, that you could make the BTD strategy work better under different definitions. However, I think the goal here was to show that people who want to wait for these severe "lifetime crashes" won't succeed with that. And keep in mind, we arguing for an all-knowing BTD strategy. I think that kind off makes up for it. In reality, you won't hit any of those dips at rock bottom.

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