Warren Buffett recommends buying U.S. stocks

But buying at what price?

This Siegel seems to be very interested in wringing every possible dollar out of his fame. I personally would not trust him too much. I will read his book, however.

i

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They are all worth reading. The printed form was very nice, though.

Dollar-averaging is the answer.

HTH

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You mean "dollar-cost averaging"? It sounds good at first, but it hasn't historically proven to be of any benefit.

Brian

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This is the first time I'm seeing someone say there's no benefit to doing dollar-cost averaging. Is there any study you can point to?

Anoop

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The concept of dollar cost averaging is a result of a misunderstanding of the exact meaning of return and capital.

Intro

Criticism by Constantinides (I attended his options class at U of Chicago)

Not quite. It has actually been proven to be of at least some benefit, if not beneficial most of the time.

But I'd appreciate if you could provide some rationale for your statement.

TIA

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Agreed, I should have said "overall benefit", rather than not of any benefit.

For the most part, people don't have lump sums to invest anyway.

Brian

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Igor Chudov wrote: Re investing in stocks regularly a la Jeremy Siegel's _Stocks for the Long Run_--

1. How should one invest money received in small sums over a long time (e.g. small sums from one's employment income)?
2. How should one invest money received as a lump sum (e.gl. an inheritance)?

DCA is advisable for 1. but not necessarily for 2.

may clarify. Siegel's counsel in _Stocks for the Long Run_ concerns question 1. As long as one has a long timeframe, he advocates buying index funds at the prevailing market rate and reinvesting dividends.

To answer your question

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There are not many choices for 1.

There was an idea, which was incorrect, that dollar cost averaging a lump sum is somehow better than investing all of it at once. It was mistaken.

As for a person who is making monthly savings, what he is doing is "investing money as soon as it is available". The return from that would be the same as the return of the market, if properly calculated. It is not any better, or worse.

Yep, that's what he is advocating.

i

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