"jdadverb" <jdadverb[at]yahoo.com> wrote in message news:<1099151112.712165.25640[at]f14g2000cwb.googlegroups.com> ...
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DCA of a lump sum is suboptimal because it reduces one's time
diversification. Suppose you are 100% in cash and decide you want to
be 100% in stocks. If you invest 50% now and the remaining 50% next
year, your return after 2 years is 0.5*year_1_return +
1*year_2_return, ignoring compounding. Why should you be more exposed
to the return in year 2 than that of year 1, if you assume the market
is efficient and yearly returns are unpredictable?

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For the amount you would consider withholding, why on earth
wouldn't you put it in a floating rate bank loan type of fund
like I mentioned http://finance.yahoo.com/l?m=&s=floating&t=M

Some, like the Pimco, may be more interest rate sensitive. The
Fidelity seems to be not. It's all a tradeoff where you would
have to find your comfort spot, but the point of them is to have
profesionals reinvesting them into higher rate vehicles as soon
as interest rates rise... so as to hopefully replace any modest
capital losses with a virtous fountain of higher dividends.

Whether or not they can do well in a rising rate environement
may be an issue of speculation... or you can look at their
history like manipulating graph options as in in my last post.

"jdadverb" <jdadverb[at]yahoo.com> wrote in message news:<1099151112.712165.25640[at]f14g2000cwb.googlegroups.com> ...
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His statement requires a huge number of caveats and conditions to
put into actual practice. I've read books by some of the experts,
and yes, experts (Malkiel, for ex., i think) it's probably better
to invest a lump sum all at once, but........I believe the investor
must carefully look at what is going on in the market/economy right
now before investing a lump sum all at once. Of course, the market
is almost totally unpredictable....but....For example, it seems
silly to me to invest all at once in a bond mutual fund when WE KNOW
interest rates are doing up and will keep going up for quite a while.
Investing little by little over a few years in a bond fund IN THIS CASE should
yield a much better total return. And with stock mutual funds,
there MUST BE times when we are almost certain it's NOT a good time to invest
IT ALL. What I"m saying is not incompatible with a statement that
says "studies have shown that DCA'ing is not as good as investing all at once
when you have a lump sum"....The studies do not say it's ALWAYS that way.

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I thought this was interesting and something I'd been wondering about.
Can you provide any references where I can read more about these
studies?

Thanks!
John Lee

Look at past sensitivity to rates by overlaying graphs of the 5, 10
or whatever year rates against funds of interest. Here are examples
of domestic and foreign high yield, and the very interesting bank loan
type of fund giving fat yield with relatively stable value. Example
link may be broken into multiple line fragments where you'd have
to re-attach:

http://finance.yahoo.com/q/bc?t=2y&s...Cffrhx%2Cfagix

In article <2abfeb2a.0410290630.66921005[at]posting.google.com> , ss
<selfish_shellfish2[at]yahoo.com> wrote:

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Have you looked at places like Morningstar, Vanguard, and Fidelity?
The former lists all the high-yield funds, the later has high-yield
funds available for investors.

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Studies have shown that dollar cost averaging a lump sum is a
sub-optimal decision. You are better off investing it all in
one shot. DCA works better when you are getting a regular flow
of cash, and you invest that cash on a regular basis.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

I'm starting to invest little by little in bond mutual funds, mainly
short-term or an overall index...but probably some junk ("hi-yield")
too. I looked around the web but can't find the yield info. I
need....
Supposedly it's not a good idea to invest in junk bonds if the spread
is ???less than 4% or 5%......Anyone know the current spread? (I
looked at WSJ.com, moodies, ...both of which require an
account.....then i looked at money.com....Where is this info., anyway?
I do read the investing magazines, but the info. is dated... What
do members of this group think of the timing of investing in these
funds.
One other thing I'm wondering, about a non-junk fund. I notice the
price hardly changes at all over a long period of time, in many
short-term funds (like vanguard short-term corp. bond, which is now
called short-term investment grade, or something). It seems that I'd
have little reason to DCA into this fund, as opposed to putting in the
whole chunk of money now. ????