General Question

extolsmith's avatar

What percentage does dollar-cost-average make sense?

Asked by extolsmith (440points) August 17th, 2007 from iPhone

I have a stock that is at -10% is this a good point to dump more funds into ir should I wait?

SBUX

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3 Answers

glial's avatar

I would probably wait until a little closer to their quarterly report. Just a thought.

Not something I invest in, just not my cup of tea...uhhmm...coffee. (pun intended)

kevbo's avatar

From what I understand, dollar cost averaging is more about buying the same dollar amount at regular chronological intervals with the assumption that, despite short or medium term fluctuations, the market goes up over the long run. Also, more shares are purchased when the price is low and fewer when the price is high. This strategy obviates both the need to time the market and the technical knowledge to make an informed buy/sell/hold decision.

I would see your scenario as more of a buy/sell/hold decision.

russellsouza's avatar

I agree with Kevbo. Dollar cost averaging is about consistent purchases at regular time intervals. I would also only do this for an index fund. It is too much in transaction fees to have a diversified portfolio and dollar cost average each item.

You need to figure out how you feel about the company and what risk level you want. If you don’t think it is the best bet right now move the funds elsewhere. If you think it is a good investment and currently “on sale” then buy more.

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