Comments on: Volatility Increases Return: Mathematical Proof http://www.obliviousinvestor.com/volatility-increases-return-mathematical-proof/ Index Investing: The Oblivious Investor Fri, 12 Mar 2010 19:19:14 -0600 http://wordpress.org/?v=2.9.2 hourly 1 By: Mike http://www.obliviousinvestor.com/volatility-increases-return-mathematical-proof/comment-page-1/#comment-122 Mike Tue, 09 Dec 2008 17:53:22 +0000 http://www.obliviousinvestor.com/?p=538#comment-122 Yep, I agree completely, Kevin. To do it as a lump sum definitely exposes you more heavily to the impact of market volatility. And I'd <i>always</i> agree that it's wise to be widely diversified, whether DCAing or investing a lump sum. Yep, I agree completely, Kevin. To do it as a lump sum definitely exposes you more heavily to the impact of market volatility.

And I’d always agree that it’s wise to be widely diversified, whether DCAing or investing a lump sum.

]]> By: Kevin http://www.obliviousinvestor.com/volatility-increases-return-mathematical-proof/comment-page-1/#comment-121 Kevin Tue, 09 Dec 2008 17:49:20 +0000 http://www.obliviousinvestor.com/?p=538#comment-121 A caveat could be that the lump sum you're investing "right away" should be the kind of lump you can afford to take some risk with, and definitely as diversified as possible to lessen the risk. A caveat could be that the lump sum you’re investing “right away” should be the kind of lump you can afford to take some risk with, and definitely as diversified as possible to lessen the risk.

]]> By: Mike http://www.obliviousinvestor.com/volatility-increases-return-mathematical-proof/comment-page-1/#comment-113 Mike Fri, 05 Dec 2008 16:39:14 +0000 http://www.obliviousinvestor.com/?p=538#comment-113 Monevator, that's a great question. (In fact, just yesterday, a friend in that very situation asked me what I would suggest.) I think I agree with you. At least, I know that when I have a lump sum, I've always just invested it right away rather than spreading it out. My line of thinking is exactly what you stated: <i>most</i> of the time, the market rises. So to keep money out is to essentially bet against it. On the other hand, I definitely don't think it would be unreasonable for somebody to try and spread it out over a few weeks or months given precisely how volatile things are lately. Monevator, that’s a great question. (In fact, just yesterday, a friend in that very situation asked me what I would suggest.)

I think I agree with you. At least, I know that when I have a lump sum, I’ve always just invested it right away rather than spreading it out. My line of thinking is exactly what you stated: most of the time, the market rises. So to keep money out is to essentially bet against it.

On the other hand, I definitely don’t think it would be unreasonable for somebody to try and spread it out over a few weeks or months given precisely how volatile things are lately.

]]> By: Monevator http://www.obliviousinvestor.com/volatility-increases-return-mathematical-proof/comment-page-1/#comment-112 Monevator Fri, 05 Dec 2008 16:16:00 +0000 http://www.obliviousinvestor.com/?p=538#comment-112 Nice video Mike, I've just posted it up on Monevator. What about a lump sum? My understanding is because the market tends to rise, it's better most of the time to invest a lump sum right away (a few times you'll lose a lot, but generally over the very long-term you'll win more times - although you may well argue you'd rather potentially lower returns in exchange for removing the risk of investing at a market peak). Anyway, might be another video idea for you. :) (Thanks for the link today, too!) Nice video Mike, I’ve just posted it up on Monevator.

What about a lump sum? My understanding is because the market tends to rise, it’s better most of the time to invest a lump sum right away (a few times you’ll lose a lot, but generally over the very long-term you’ll win more times – although you may well argue you’d rather potentially lower returns in exchange for removing the risk of investing at a market peak).

Anyway, might be another video idea for you. :)

(Thanks for the link today, too!)

]]> By: Miranda http://www.obliviousinvestor.com/volatility-increases-return-mathematical-proof/comment-page-1/#comment-110 Miranda Fri, 05 Dec 2008 13:38:38 +0000 http://www.obliviousinvestor.com/?p=538#comment-110 Great, informational video. My friends and relatives have been surprised that I'm not more worried about my retirement account. I just shrug and say, "My money is buying more right now. Later, I'll be very happy." Also, I've been doing a little more buying on the dips lately for my other investments. It's been good, and I've even made a little extra scratch when I sell on the rallies. Great, informational video. My friends and relatives have been surprised that I’m not more worried about my retirement account. I just shrug and say, “My money is buying more right now. Later, I’ll be very happy.”

Also, I’ve been doing a little more buying on the dips lately for my other investments. It’s been good, and I’ve even made a little extra scratch when I sell on the rallies.

]]> By: Singapore Recession http://www.obliviousinvestor.com/volatility-increases-return-mathematical-proof/comment-page-1/#comment-108 Singapore Recession Thu, 04 Dec 2008 14:52:21 +0000 http://www.obliviousinvestor.com/?p=538#comment-108 Hey, That's a cool explanation video. Ren Hey,

That’s a cool explanation video.

Ren

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