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No point in arguing. More important than stock price/quantity is the quality of the match for the specific type of trade in mind. AAPL is an excellent choice both as a buy and hold and as a swing trade, especially for a one equity portfolio.
The safest, most effective strategy for a novice though, IMHO, is dollar cost averaging.
No point in arguing. More important than stock price/quantity is the quality of the match for the specific type of trade in mind. AAPL is an excellent choice both as a buy and hold and as a swing trade, especially for a one equity portfolio.
The safest, most effective strategy for a novice though, IMHO, is dollar cost averaging.
I don't know. I'm a novice, I'm trying to see how it would apply to my situation.
Dollar cost averaging doesn't work so hot when you have high transaction costs relative to the amount you're investing, and are attempting to diversify what little you have across multiple investments.
I do employ it in my 401k, where I have mostly index funds, but for that transaction cost issues are not the same.
Point of clarification: When I said novice in the above statement I was referring also to a young investor with a long event horizon. Hence the tolerance for lack of diversification and reference to one equity portfolio.
Yes, I agree. In the 401K, dollar cost averaging is almost a no brainer. It is easy. You set it in motion with a single action and then at predefined (usually payroll schedule) intervals, additional funds are added to purchase more of the specified assets, usually investment funds. As the market moves up and down, small amounts are purchased based on the calendar, some of which are under favorable conditions, while some are not. However if the overall trend is up, and in a time horizon window of 10 years or more it usually is, odds are good for a better than market return on investment. Perhaps it should be noted at this point that not every investor can read the market and make the correct moves in front of the shifting tide. By using a calendar based entry system, one doesn't have to be able to predict the market. If the market is going down, each successive purchase averages down the cost basis of the existing portfolio while it is shrinking in value. When the market is going up, the portfolio appreciates value along with the incremental purchases along the way.
But, dollar cost averaging, absent the automatic payroll deposit/distribution, is still possible with discipline. For example, in a roll over IRA or brokerage account one can set automatic weekly deposits and then manually distribute quarterly. This has an added advantage of being able to hold an ill timed distribution under the perception of an unfavorable entry point. It's still dollar cost averaging as long as one is purchasing more of the same asset to average down the cost basis.
Dollar-cost averaging also works for those of us who use discount brokers and re-invest the dividend payments back into the companies. As share prices drop, the dividend re-investments buy a greater amount of shares. I keep track of my dollar-cost averages and can see it dropping quarterly after dividends get sent out.
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