Authors: Brian C. Payne; Jeffery Bredthauer
Addresses: Department of Management, United States Air Force Academy, CO, USA ' Department of Finance, Banking and Real Estate, College of Business Administration, University of Nebraska-Omaha, Mammel Hall, NE, USA
Abstract: A recent study finds that a Lump Sum Investing (LSI) strategy outperformed a Dollar Cost Averaging (DCA) strategy approximately two-thirds of the time between January 1927 and December 2011 using multiple DCA periods and adjusting for risk. This study extends these findings by examining other risk adjustment measures as well as analysing shorter DCA periods and timing considerations. Focusing on the US stock market for the past 20 years, the LSI strategy does not dominate DCA as strongly as the prior results indicate. Instead, the decision is sensitive to the DCA duration, the timing of strategy implementation and the risk-adjustment method considered.
Keywords: DCA; dollar cost averaging; LSI; lump sum investing; market timing; investment strategies; lump sum averse; risk adjustment; USA; United States.
International Journal of Financial Services Management, 2013 Vol.6 No.4, pp.263 - 272
Available online: 02 Mar 2014 *Full-text access for editors Access for subscribers Purchase this article Comment on this article