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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: MrGreenJeans who wrote (5711)7/2/1998 8:04:00 PM
From: Bill Shepherd  Read Replies (2) of 42834
 
Re: I think I will do what I have been doing the past few weeks: take some profits...

This raises a question that was on Moneytalk several months ago, as well as this thread, I believe. That is the question of dollar-cost-averaging OUT of the market. If my memory serves, I recall several threaders thinking that it was not such a great idea. I wonder what you think? It seems to me the principle is the same, whether you are entering or exiting the market: DCA'ing into the market is conservative in that it is a disciplined method of investing that also tends to smooth out day-to-day price fluctuations. Likewise, DCA'ing out is disciplined and protective of day-to-day fluctuations.

But let's face reality...if you REALLY thought the market was going to be 10 or 20 % higher next year, why wouldn't you just put your whole annual allocation into the market today? Why settle for a reduced return? Likewise, if you REALLY thought the market was going to be down 10 or 20 % next year, wouldn't you just pull out? [Tax considerations aside]

So...help me with the logic...if you wanted to reduce your exposure in the market (say go from 100 percent equities to 60 percent equities) AND you thought the market was going to flatten out, wouldn't DCA'ing out of the market be prudent?

Regards...Bill S

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