Yes, volatility is very low and it feels like a strange market. On the one hand, there are signs that things are deteriorating in the economy. On the other hand, with a lot of fiscal headwinds, low interest rates and political uncertainty coming to be resolved after the election is over, it is hard to see how stocks would not continue to do very well over the next few months in spite of any economic headwinds.
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Ideally in times like these I’d want to buy, and buy more than usual - that’s what I did last year in the end of October, however right now I am committed to building up my cash reserves back to 3-4 months’ expenses, so it’s like I have o cash to plug into the market to take advantage of the 10-11% drop in VWRL.
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Wow what‘s causing this crash in the last 3 weeks? I lost like 7k lol.
Out of curiosity, did anybody buy something 3 weeks ago? 
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I’m sure you know you didn’t lose anything 
It’s all fairy dust anyway 
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Nothing happened… have a look at the End of Aug Index levels and then thinknof what you want to do.
Nop, you want to do nothing. If you want to buy, then earliest 3 days the daily declines stopped. Better after a months.
Reductions go in waves throughout the globe. US down drives Australia down, which drives US down. Things will ebb out somewhen and need 72 hours until the waves cease.
If you can, do nothing until large drops / vola cease for 3 days. Even better - wait for month end.
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Close to 3 weeks ago I bought:
- 200 shares of PAX on July 10, book value -$216 today
- 100 shares of ES on July 15, book value +$753 today
- 62 shares of BTI on July 15, book value +$262.26 today
Just keep buying.™
The only thing that bothers me right now is that I have a large sum of cash becoming available at the end of next month. By then, the market will have rebounded.
So no Buying The Dip™
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Buy on margin, you will have the cash shortly, right?
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I have a cash account at IBKR
Ah, they’ll upgrade it for you in a day or two. 
I just spent 2.5 hours to simulate a few scenarios about “buying the dip”, including this proposed strategy and will summarize the methods/results below. As we all know and read many times, it is overall less successful to hold money back for market timing. So if we follow this statement, there should never be the option to “give some extra” into the dip as everything is already invested (aka time in the market > timing the market).
However, reality and the human psychology works often a bit different. If something happens that we suddenly feel more motivated to go a bit “more” into the risk and invest a bit more to “buy the dip” and overperform vs. the market. From this (from a rational standpoint wrong) perspective, we can now compare some scenarios.
Scenario 1: Baseline
- invest 1000$/month into VT (always after salary payment; on 28. of the month)
- no additional investments/adjustments due to market performance
Scenario 2: Immediate Buy-the-Dip
- follow the baseline scenario, but if there is a >=2% drop of VT in one day, then immediately invest another 1000$ on the next day
- maximum 1 additional payment per month (so either we invest 1000 or sometimes 2000$); any following drops of >=2% are ignored because there is no more money available to invest
Scenario 3: Short-Delayed Buy-the-Dip
- follow the baseline scenario, but if there is a >=2% drop of VT within 3 days, then invest another 1000$ on the third day
- could help to avoid buying while market still goes down
Scenario 4 (inspired by @TeaGhost): Cool-Off Buy-the-Dip
- follow the baseline scenario, but if there is a >=2% drop of VT on one day, it waits until at least 3 continuous days there is no more than a 0.2% downturn per day (measure of reduced volatility); if this is the case, buy in with 1000 $
- if this becomes the case but the price is already higher than before the drop (e.g. one day after a -2% you get a +2.2% rebound), it ignores the event and continues with the baseline investing
- max 1 additional event/month (max 2000$ investing/month)
Scenario 5: Baseline 50-50 Dip
- invest 50% of the total investment amount (e.g. 500$ of 1000$) on any day during the month if there is a 2% drop in VT price
- invest the remaining 50% at the end of the month as in the baseline scenario
- if there is no drop during the month, invest the full 1000$ at the end of the month
- every month the same amount is invested; only difference is the timing of 50% of the amount within the month
Scenario 6: Hardcore Buy-the-Dip
- similar to scenario 5, but here we invest the full amount (100%, so 1000$ out of 1000$) as soon as we see a 2% dip
- if there is a dip during the month, no additional payment is made at the end of the month
- if there is no dip, we invest the 1000$ at the end of the month (same as in baseline scenario)
Methods
- simulated over a timespan of 10 years, and starting at each month between 2008 to 2014 (and then 10 years from the start) → total nr of simulated 10-year timeframes = 120
- calculate return in % for each of the 120 timeframes and for each scenario
- get mean % of all timeframes and standard deviation
- return = return of investment → (sum of all investments)/(final value of portfolio)*100 - 100
Results
All results here are only about % return. Absolute return varies due to different amount invested.
Note, for baseline, the return of investment in % would be the same if I invest 1000$ or e.g. 2000$/month (corresponding to 240 buy-events, but 2 on the same day; disregarding fees).
- Baseline - Average 10-y return: 60.7% Std: 14.9% Buy-events (average): 120
- Immediate Buy-the-Dip - Average 10-y return: 63.5% Std: 15.8% Buy-events (average): 160
- Short-Delayed Buy-the-Dip - Average 10-y return: 63.5% Std: 16.2% Buy-events (average): 175
- Cool-Off Buy-the-Dip - Average 10-y return: 62.2% Std: 15.3% Buy-events (average): 131
- Baseline 50-50 Dip - Average 10-y return: 60.7% Std: 14.9% Buy-events (average): 160
- Hardcore Buy-the-Dip - Average 10-y return: 60.6% Std: 14.9% Buy-events (average): 120
Summary
- The strategies are all kind of similar (given that we stick to the baseline investing for each of them)
- Small advantage in return for buy-the-dip strategies (but remember, that technically only works when the money “appears” during a crash and could not have been invested before)
- Immediate Buy-the-Dip was not worse than other strategies such as cool-off or delayed buy-the-dip; but cool-off only needed 11 additional investments (vs 40 for immediate and 55 for delayed) to get the 1.5% edge over baseline (62.2 vs. 60.7)
- Increased return is only visible when adding additional money to the table, while trying to time within a month did not help at all (see scenario 5 and 6)
→ likely because changing the exact day within a month is too small to make a real difference; but profiting of bad months can slightly help - Lots of assumptions went into that calculations. Given that the outcome is similar for all of them, I wouldnt invest more time digging around. But if someone wants to continue, let me know and I’ll share my Jupyter Notebook
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Nice, I like it!
Lots of work you put into this. 
I’ll say, though, the outcome totally depends on how you define the non-Baseline (aka non-DCA) scenarios.
I just recently came across a post that compares DCA to “Buying the Dip” where “the dip” means buying at the exact market low between any two all time highs.*
Turns out DCA beats most of the time.
Post (in German) where I picked this up: Buy the Dip vs Dollar Cost Averaging/Sparplan. Was ist besser? (arvy.ch)
Original post (in English): Even God Couldn’t Beat Dollar-Cost Averaging (ofdollarsanddata.com)
(turns out to be by the same guy who wrote “Just Keep Buying” — honest to God, I did not know before looking up the original post just now).
* Admittedly, I feel that’s a little contrived as well, but so are the other buying the dip scenarios. At the end of the day, it’s investor psychology what investors perceive as “the dip”, and it probably not only varies from investor to investor but even within one investor over time.**
** That includes me.
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Yeah, that’s a problem, I think. Considering that markets went mostly up, you have more money compounding. Furthermore, it is a rather unrealistic scenario of money appearing when you need them 
. More seriously, I am not sure how you have calculated the return and if it is correct. I don’t even know what is the right way to calculate it in this scenario.
What about the following scenarios:
- you always invest 1000$ per month
- on the last trading day of a month (or 28th) in the base scenario or if it was not invested by a trigger
- before the end of the month according to your triggers.
In this case, the total number of buys and the total money invested would be same.
Sorry, but I am not in a position to take over.
And the inflation adjustment would be another story, I am afraid.
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Thanks, this is very interesting and something I always wondered.
In the buy the dip cases, you list 160 buy events versus 120 in the base case. That means 160k was invested instead of 120k which is substantially more.
I think it would then make sense to compare with a scenario where the same amount was invested every month over 10 years. In other words what happens when there is no buy the dip, but we are now investing 1333 per month (which would be close to 160k in 10 years)?
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My initial reaction was similar: you just have more money overall with time in the market, hence the outperformance, but I wasn’t sure whether the potentially $2k deployed in the buying-the-dip scenarios were saved from months where no dip occurred.
If not, the simulation should probably be adjusted to deploying equal amounts of cash in each scenario?*
* As done in my referenced comparison between DCA and buying at the “perfect” dip (in the latter, cash is saved up until the “perfect” dip appears).
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In my opinion, to compare apples to apples.
In each scenario , same amount of money needs to be invested
Now since you are trying to simulate market timing, the baseline needs to have uniform investment every month . But the other scenarios should have delayed Investment because one is trying to buy the dip.
So baseline -: 1000 USD invested on 28th of every month
Other scenarios -: Investor didn’t invest on 28th and kept waiting and then at some point during the month, an opportunity arrives and investor invests. If buy the dip opportunity doesn’t arise, then investor will invest on next 28th. So the longest wait would be 30 days.
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Thanks for the suggestions, I’ll look into making some more calculations 
Here a few answers to start with:
For this example, I calculated return in the sense of the total return of investment:
(amount of money at end of simulation timeframe)/(amount of money invested).
E.g. 120k invested, 130k in the end → 130/120 = 8.3% return
I mainly care about how much money there is at the end, and less about how much each individual buy-in made etc. Therefore I feel like this measure seems the most intuitive to me.
Both good ideas, might give them another shot.
Indeed. But not only inflation, also Fx rates. USD-CHF was much higher 10 years ago vs. today.
I actually did include this in my simulation, but since based on the pure return % you get the same outcome, I havent included it in the post. Imagine you invest every month 1000$. After 10 years you invested 120k and you got out 180k → your money increased by 50%
If you now invested 2000$/month you would have invested 240k and got 360k → still increased by 50%.
→ added a brief note about this to the post above as well
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