Actively managing dollar cost averaging..

[guydumont]

Well Im a simple man.  This is what Ive been doing. 

Since March 2008 I've been investing in my ING Direct Streetwise Fund (Growth)  25%tsx60, 25% S&P500, 25% EFA/emerging, 25% Dex cash bond universe.  It has a expense fee of 1%.  (decent)

When I initially started I was putting 30$ evrey 2 weeks.   For the last few months Ive been doing 10$/day.  Either way hear this out. 

Dollar cost averaging is the lazy way of investing.  Its usually gotten bad reviews by most "experts".   They always compare with lump sum investing in bull markets over the long haul.  Now in a bear market i think it's all about buying more at a cheaper price...   This mutual fund has been as high as 10.35$/share and as low as 7.84$/share over the last 8 months or so.   The reason why I think my way works is because:

1.  It's a bear market and Im not trying to guess the bottom.

2.  Every time the fund value drops to a new .50 cent low I buy 10% of my portfolio.  When it drops to a new round number low i.e. 8.00$/share I add an additional 12% to my total portfolio.  Im in essence doubling down like I was playing russian roulette.  (gambling does have a place in money management in my opinion) lol  Ask winning poker players. 

3.  Im combining Dollar cost averaging with simple mathematics  in a safe manner to get the deals all the way to the bottom.  I don't care if this mutual fund is worth 3$/share one day Ill just keep on buying more with this system.  I do predict that the fund will be worth 15$/share some day.  If history repeats itself. (recovery, and bull run)

So as of right now I own 203 shares.  My average price that I paid for these stocks as of today is 8.30$/share.  (Ive included the 1%fee on the average price).    The mutual fund is worth 7.84$ right now. 

Im clearly on the lower side of 10.35$ vs 7.84$ at an 8.30$/share average.     Which means that Im buying cheaper and accumulating more shares.

I might even increase my purchasing to 15% for every new 0.50$ drop
and 18% for every new round number drop.  As of today I am still putting 10$/day into this.  Once I get my raise at work will put 15$/day. (5430$/year) 

I want to see if I can beat the market this way.    If it ever becomes a bull market (tsx 12000 or above) I will still buy 10$/day and ill add 30 every day that the market drops more then 3% to keep on getting deals.  But Im not worried about any bull market anytime soon.  There is too much of a mess in the states.  GM/Ford, commodities, etc...

i would like to hear what people think about my system.  Or if there is a better way of doing this.  Thanks for reading my insanity! 

TSX will see 8000  bottom
TSX will hit 17000 by 2011 top ??  who knows.