12-05-2013, 07:01 PM
(This post was last modified: 12-05-2013, 07:41 PM by hendi_alex.)
Sounds like a good compromise plan to me. I don't remember which companies, but in the past I've seen where some companies give something like a 5% discount for drip shares. There certainly is a benefit to participating in that kind of plan. For me, all the others where there is no discount for drip shares, one is likely better off letting all dividends accumulate for a bargain purchase on one of those black swan kinds of days, only buying one or two days per year.
I use to know an investor who stayed mostly in cash about 80% of the time. When there was a huge market drop of 10% or more, he would make a large initial deployment and then feather in upon further weakness. When the invariable rebound took place, he would feather his way back out. It seemed that a couple times per year, he would rake in 10%-15% or more, soundly thrashing me with my technique of usually being 80% or more long at any point and time.
If a person traded an S&P500 index fund and only used the bollinger bands to determine buy and sell points, how well would they have done in the past 12 months. Let's say that the person bought when the BB were within 5% of the lower band and sold when the chart was within 5% of the upper band, moving 100% between investment and cash on each round trip. It looks to me as if that strategy would have netted at least 30% YTD, and cash would have only been deployed about 50% of the time, holding the duration risk down considerable over a buy and hold strategy. This might be something worth trying with at least a portion of assets. Would the strategy work as well in a generally falling market? I think that it would, but would carry more risk in case there was a large gap down at some point. That risk would probably lends support to a strategy of feathering in during the fall and feathering out during the rise, so that capital always stays in the ready in case something dramatic were to happen.
![[Image: z?s=%5eGSPC&t=1y&q=l&l=on&z=l&a=v&p=b&la...®ion=US]](http://chart.finance.yahoo.com/z?s=%5eGSPC&t=1y&q=l&l=on&z=l&a=v&p=b&lang=en-US®ion=US)
I use to know an investor who stayed mostly in cash about 80% of the time. When there was a huge market drop of 10% or more, he would make a large initial deployment and then feather in upon further weakness. When the invariable rebound took place, he would feather his way back out. It seemed that a couple times per year, he would rake in 10%-15% or more, soundly thrashing me with my technique of usually being 80% or more long at any point and time.
If a person traded an S&P500 index fund and only used the bollinger bands to determine buy and sell points, how well would they have done in the past 12 months. Let's say that the person bought when the BB were within 5% of the lower band and sold when the chart was within 5% of the upper band, moving 100% between investment and cash on each round trip. It looks to me as if that strategy would have netted at least 30% YTD, and cash would have only been deployed about 50% of the time, holding the duration risk down considerable over a buy and hold strategy. This might be something worth trying with at least a portion of assets. Would the strategy work as well in a generally falling market? I think that it would, but would carry more risk in case there was a large gap down at some point. That risk would probably lends support to a strategy of feathering in during the fall and feathering out during the rise, so that capital always stays in the ready in case something dramatic were to happen.
Alex