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To: Gary Walter who wrote (4400)	12/20/1997 8:25:00 AM
From: LastShadow	Respond to of 120523

Modified Value Cost Averaging: Dollar Cost Averaging is where one buys a fund or any equity at a fixed sum every period - Say $100 a week. this way, wehn the share price is higher you buy fewer shares, and when its lower, you buy more shares. This allows you to accumulate shares inversely to the fluctuations in price. Value Cost Averaging says you buy the same value every week - sot that if the price of the equity goes up 5 % you buy 5% less, and 5% more is the prices goes down 5%. In this way, the value of your investments remains constant, although the price you pay varies. Ten years ago I started using a method I call Modified Value Cost Averaging, whereby if the share price goes up 5% I buy 50% less (10 times the fluctualtion), and if it goes down 5% I buy 50% more. In this way one leverages fluctuations of share price to maximum advantage. Howver, on a weekly base of a $400 investment, the amount depositied may sing from a low of $150 to a high of $650 depending on market conditions. This method also has shown to accrue a smaller annual dollar input than the above two methods - and part of the total p% gain isrealize bay taking whatever money was not spent on the fund an reinvesting it at year end - usually Dec 23 to take advantage of the PreHoliday efffect on that day. If a given fund generates, say a 25% av return over 20 years, the Value Cost Method will generate about 40% and the Modified Value Cost Averaging will generate about 75% return - or about 3 times the standard method. All you hav to do is determine the share price from the Sunday Newspaper or online record, compare that to the last weeks, and adjust your deposit accordingly. Takes about 5 minutes max for four funds I do this way. Actually, I do it in an Excel spreadsheet, so its quicker, but 10 years ago I started doing it manually and takes no effort. I can email a spreadsheet of calculatons for a pair of Fidelity funds for this year that shows the three effects on a $400 weekly base contribution. However, since I do have a bit of work to do before year end, I may not get them all out until after Christmas. lastshadow