Recall the objective of this experiment is to produce double digit returns by dollar cost averaging into either financial assets or hard assets based on where we are in the cycle. I contend that we are in the hard asset phase. Read “The No-Brainer Investment Strategy to Double Digit Returns” for more details.
Gold and Gold stocks continue to lag the broad market. However, their action this week especially on Thursday and Friday looks promising. For the week, CEF 3.3% and GDX 4.7% v. S&P 500 1.3%. It looks like their days of underperforming may be numbered.
Here is the latest update: Continue reading ‘The Dollar Cost Averaging Experiment Results thru 5/31- CEF Continues to Lag’
Recall the objective of this experiment is to produce double digit returns by dollar cost averaging into either financial assets or hard assets based on where we are in the cycle. I contend that we are in the hard asset phase. Read “The No-Brainer Investment Strategy to Double Digit Returns” for more details.
There is no question that the DOW has been the star of the year or has it? It has definitely garnered all of the headlines. How many realize that year to date gold is up more than the DOW? I was surprised and I watch this stuff every day. Gold as measured by its ETF (GLD) is up 7.9% v. DOW at 6.4%. Who would have thunk it?
Continue reading ‘The Dollar Cost Averaging Experiment Results thru April 30 - The DOW Shines?’
Recall the objective of this experiment is to produce double digit returns by dollar cost averaging into either financial assets or hard assets based on where we are in the cycle. I contend that we are in the hard asset phase. Read “The No-Brainer Investment Strategy to Double Digit Returns” for more details.
Gold lost $40/oz (slightly over 7%) from February 27 to March 5, as the February stock market smack-down had a major effect on old yeller. By the end of the month, it had recovered nearly half of its losses. Silver on the other hand was hit much harder as it lost 14% over the same period. CEF, a 55/45 mix of gold and silver bullion, was down 2.7% for the month and GDX, Gold Miners ETF, closed down 0.8%. The S&P 500 closed the up 1%. CEF and GDX are both now lagging the S&P 500, but Gold’s recovery over the past three weeks is encouraging. Continue reading ‘The Dollar Cost Averaging Experiment Results thru March 3 - Recovering From the Smack-Down’
Published March 3rd, 2007
in Dollar Cost Averaging.
Recall the objective of this experiment is to produce double digit returns by dollar cost averaging into either financial assets or hard assets based on where we are in the cycle. I contend that we are in the hard asset phase. Read “The No-Brainer Investment Strategy to Double Digit Returns” for more details.
We had a great month in the making until the 2/27 meltdown. Fortunately, smack-downs early in the year are easier to recover from since we have time on our side. As of 2/28, CEF and GDX returns using dollar cost averaging are 2.3% and 0.4% respectively. Both are out performing the S&P 500’s -1.5% return. Let’s see if Gold continues to fall with the general market or stands up on its own.
Continue reading ‘The Dollar Cost Averaging Experiment Results thru February 28 - Gold Melts Down with Market’
Fear and greed are the largest barrier between any investor and big profits in the stock market. When stocks are rising the fear of missing out (greed) takes over. When stocks are falling, fear of being the last one on the boat is front and center. Although, everyone knows the objective is to buy low and sell high - those two emotions lead most to do the opposite. That’s a fact of trading. The difference between a successful investor and one who is not is simple. The successful investor has incorporated a strategy to minimize fear and greed while trading.
There are numerous strategies that one can use. However, I believe dollar cost averaging is the best one for the average investor. I have many articles on dollar cost averaging on this site. I do suggest a slight twist based on where we are in the financial/hard asset cycle. Read the “The No-Brainer Investment Strategy to Double-Digit Returns” for more details.
Once again we will document dollar cost averaging into two Exchange Traded Funds (ETFs): Central Exchange Fund of Canada (CEF) - a gold and silver bullion ETF and GDX - a gold stock ETF. Each month they will be tracked versus the market represented by the S&P 500. Let’s see if we can nail double digit gains this year. Here are the results after one month.
Continue reading ‘The Dollar Cost Averaging Experiment - Let’s Try it Again in 2007′
I am not going to try to put any lip stick on it - the dollar cost averaging experiment was a disappointment for 2006. The goal is to not only outperform the S&P 500, but return double digits with little thought - simply discipline. The thesis is that the stock market runs in 34 year cycles. Stocks outperform hard assets like gold and silver in the first half of the cycle. In the second half the the cycle, hard assets outperform stocks. My assumption is that we are in the commodity phase of the cycle. Read the “The No-Brainer Investment Strategy to Double-Digit Returns” for more details.
Continue reading ‘The Dollar Cost Averaging Experiment - Final Results 2006′
Recall the objective of this experiment is to produce double digit returns by dollar cost averaging into either financial assets or hard assets based on where we are in the cycle. I contend that we are in the hard asset phase. Read “The No-Brainer Investment Strategy to Double Digit Returns” for more details. With less than 30 days remaining in the year, achieving our goal is in site. To date CEF’s return using dollar cost averaging is 14.62%; exceeding our goal and outperforming the S&P 500’s 8.5% return. The gold stocks represented by GDX are also outperforming the S&P 500.
Let’s hope December is a kind month for hard assets. Continue reading ‘The Dollar Cost Averaging Experiment Results thru December 4 - Finish Line in Site’
In last months update I was concerned, but had not given up hope - that the No-Brainer Strategy would deliver double digit returns this year. The No-Brainer strategy is simply dollar cost averaging into the S&P 500 (financial assets) or Gold (tangible assets) based on where we are in the market cycle. Read “The No-Brainer Investment Strategy to Double Digit Returns” for more details. My premise is that we are in the tangible asset phase of the cycle. CEF and GDX are the investment vehicles of choice representing tangible assets. Here is my voice of concern last month:
“It is going to be a challenge to meet our goals of double digit returns in CEF and GDX using this strategy. However, even after this month’s drubbing - I still believe that both will out-perform the S&P before the year is over. No, I am not smoking anything. My theory is that the general market is being propped up for the mid-term elections. We want voters happy when they walk into the booth. Afterwards, all of the geopolitical issues will resurface and money will flow back into commodities.”
Gold is already off to a stellar start this month. Closing today at $630.10/oz up 3.84% in only 10 days.
Continue reading ‘The Dollar Cost Averaging Experiment Results thru November 6 - Gold Rebounds’
I thought that May was a bad month for Gold. That was tame compared to September’s pounding. In the month, CEF lost 12.76% with GDX losing 19.79%. Just last month I wrote that gold stocks were on the verge of a break-out and then this happens. This is taking volatility to a new level. September’s action has taken out all of our dollar cost averaging gains for the year plus some.
It is going to be a challenge to meet our goals of double digit returns in CEF and GDX using this strategy. However, even after this month’s drubbing - I still believe that both will out-perform the S&P before the year is over. No, I am not smoking anything. My theory is that the general market is being propped up for the mid-term elections. We want voters happy when they walk into the booth. Afterwards, all of the geopolitical issues will resurface and money will flow back into commodities.
Continue reading ‘DCA Experiment October 4 - Gold Pounded’
Published September 23rd, 2006
in Investing - General and Dollar Cost Averaging.
The quote of the day comes from Adam Hamilton,
“The one non-negotiable prerequisite for a major interim bottom to be carved is for traders to be paralyzed with fear, doubt, apathy, and even loathing for a suddenly out-of-favor sector.”
Wow, who would want to buy stocks in that environment? Not many. Therein is the difficulty of making money in the stock market. As opposed to buying at the bottom, most wait until everything looks rosy. In May when gold was trading at $700, everyone wanted to buy. Now four months later at $590, buyers can’t be found. Professionals profit off of your emotions. Thus, they were selling Gold at $700 and are probably scaling back in now.
To be successful in the market, one must put their emotions in check. The best way, for most, is to use a dollar cost averaging strategy. It is a structured plan that takes the emotions out. There are several articles for your review in the DCA Experiment and Dollar Cost Averaging categories.
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