Performance Evaluation between Dollar-Averaging and Lump-Sum Investing after Risk Adjustment
|Keywords:||定時定額投資;總額投資;平均數-變異數分析;Dollar-Averaging(DA);Lump-Sum Investing(LS);Mean-Variance Analysis|
Most financial specialists strongly recommend their customers to put a fixed amount into the security market at regular intervals, such as every month. They argue that the average cost for each unit of security could be reduced since more securities are got when prices are low. This strategy, known as dollar-averaging(DA), is indeed more sensible than trying to time the market and buy when prices dip. An alternative to DA is to invest funds at one time, which is called lump-sum investing(LS). This article presents evidence that the LS policy is superior to the DA policy in Taiwan stock market. The main subtlety involved this demonstration is making the correct risk adjustment derived from Rozeff’s delicate approximation formulas for dollar-averaging and lump-sum policies.
|Appears in Collections:||Thesis|