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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75634  
Subject: Re: Further re DCA and lumpsum investing Date: 3/24/2012 11:00 PM
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I don't think much can be added to the previous thread. The stock market is going straight up for 3 months now. Everyday you can find talking heads on CNBC who say the market is now fully valued and a correction is coming. (Others say the recovery is doing OK and stocks are likely to do well at least until after the election.)

If the market does do a major correction right after you invest, you will regret not having done DCA, ie held some back to take advantage of the lower prices. On the other hand, the yield you are likely to get on the cash you hold is likely to be low. (Some like the better yield of junk bonds, but others say inflation is already here--interest rates have to rise one of these days--as in after the election.)

Of course if the market continues to recover, you will lose out on those gains and not be able to make them up with interest on your fixed incomes.

There's no two ways about it. Its a risk. You cannot completely protect yourself from it. And in a year or two, you will know what you should have done.

Personally, I would split the funds into chunks and invest at 3 mo intervals. But you might accelerate the pace if you see good opportunities or become convinced one way or the other as time goes on.
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