I’m not going to sell anything, but I should probably think about rebalancing and add the rest of the money?

Todd

Even spreading out purchases provides no guarantees. Todd could patiently buy over six months and find that just after he makes his last purchase, the market tanks. That’s the nature of the beast and we don’t have a choice but deal with that uncertainty.

While all the points about how we’ve enjoyed a lengthy bull market and it might crash any day are perfectly valid – they were also perfectly valid 30 months ago when the bull run was 32 months (the average) old. Had someone switched to cash (or stayed) in cash at that point they would have lost out big time.

I’m in no way saying that the market is going to keep going up but my point is that nobody can predict it very accurately. The other comment I see frequently is the idea that the market will have a big crash because it’s done so well. Yes, it’s possible but another way for valuations/earnings to even out is to have flat returns for an extended period which Katesenelson is proposing.

Summary – there’s nothing wrong with Todd spreading out his purchases but I would suggest he pick a limited time frame (6 months max) to get it all invested.

Mike

The problem with a lot of people is they aren’t disciplined enough to do lump sum, so they need to dollar cost average as it forces them to save a little bit at a time.

Consider that since 1957 the average bull market lasts 32 months and we are in month 62 of the current bull market (longest since then), and that the average bear market lasts 11 months – makes me a bit weary about “reversion to the mean”.

While I don’t believe you can time the markets, I do believe you can take advantage of opportunities when they present themselves.

IF you are interested in averaging out, or even waiting for opportunities one idea is the following:

With $60,000 you could setup a 10 year bond ladder. When no opportunities present themselves you could invest the coupon payments and annual maturity principle of a bond into the markets. If an opportunity presents itself you could sell some bonds as needed to take advantage. This way you are not locked in to anything and still getting some returns while allowing for flexibility.

I’m just shooting from the hip here.

Also consider that if your call on the economies here are negative, then interest rates will fall increasing the value of your bonds.

You could put the lump sums that accrue from the coupon payments and bond maturities into the worst performing component of the sleepy portfolio. I have to admit I haven’t really looked at it, and just assume it is a variant of the global couch potato portfolio (I know I’m bad – I’m going to go look at it right now) :

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