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<<(2) An investment strategy, as an alternative to putting an available lump sum into the market all at once. An investment strategy is also essential, but this is not a good one. It's a form of market timing, but strangely, one that doesn't even look at the market!


I think it's unreasonable to label dollar cost averaging a form of market timing, since as you note it doesn't consider the state of the market.

Instead, I consider it a form of diversifying an investment over time.

If I have a large lump sum, I tend to feed it into the six or eight monthly DRIP purchases I have going pretty much all the time. Smoothing out those investments over time works better for me than dumping it in willie nilly regardless of the current price, or seeking out a low price, which would be market timing.

I often maintain DRIPS for many years. I look for good stocks and then start investing. If my evaluation of the stock turns rotten, I'll sell out. If it developes an irrational exuberance, I'll sell. But mostly, I keep making monthly investments.

Seattle Pioneer
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