Nasdaq: Value Averaging For The Long Haul

Have you kicked yourself for having missed the superb rally of the 1990s in Nasdaq? More likely you have kicked yourself for buying stocks on the way down, only to see it go even lower! Ditto for the rally between 2003-2008 and the collapse that followed. What are we poor blighters supposed to do? Precisely when we gather up enough courage to start buying, the market starts its descent. And while we listened to all the fear mongering and did nothing, the market went up. Perhaps the answer lies in value averaging? There is a nice book written by Michael Elseson on this subject, and would you believe it, for some years the book was actually selling for more than its listed price beause it had gone out of print. Anyway, the concept is simply to marry dollar-cost averaging and rebalancing. The Nasdaq index would undoubetdly start its correction sometime in the future. When the correction starts, we should start buying steadily for similar amounts every month. That way, we would be holding a nice portfolio at an average cost somewhere in the middle of the range of the correction. EVentually, when the third wave starts, (or call it “C” wave if you like – it doesn’t matter which if you are looking for higher prices in the medium term), you will be smiling, and remembeing this post in Wavetimes!