Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96449
Authors: 
Ulbricht, Dirk
Year of Publication: 
2014
Series/Report no.: 
DIW Discussion Papers 1376
Abstract: 
Do timing and time diversification improve the average investor?s stock market return? Contrary to literature?s scenario of wealthy investors, average investors invest each month over life. Many purchases prevent investors from buying at peak, but horizons decrease, giving latter investments less time to offset losses. This paper accommodates timing using internal rates of return, facilitating the comparison of wealthy and average investors. One to 480 months investments in S&P and downward trending Nikkei, are compared. In conclusion, average investor?s risk and return ratios improve with horizon and, compared to wealthy investors, in bullish and deteriorate in bearish markets.
Subjects: 
Dollar-weighted return
retirement accounts
risk
cost averaging
DCA
time diversification
JEL: 
G11
G17
D14
Document Type: 
Working Paper

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