Document Type
Article
Publication Date
Summer 2018
Abstract
Dollar cost averaging—spreading an investor’s stock purchases evenly over time—is widely touted in the popular press because of the mathematical fact that the average cost per share is less than the average price. The academic press has generally been skeptical, and attributes dollar cost averaging’s popularity to investor naiveté and cognitive errors. Yet, dollar cost averaging continues to be recommended by knowledgeable investors as a sensible way to avoid ill-timed purchases. We argue that dollar cost averaging is, in fact, an imperfect, but helpful strategy for diversifying investment decisions across time.
Terms of Use & License Information
Recommended Citation
Smith, Gary N. and Artigue, Heidi Margaret, "Another Look at Dollar Cost Averaging" (2018). Pomona Economics. 19.
https://scholarship.claremont.edu/pomona_fac_econ/19
Comments
This article is a preprint of an article published in The Journal of Investing. DOI: 10.3905/joi.2018.27.2.066. https://www.pm-research.com/content/iijinvest/27/2/66.abstract