Well, it works if you could predict a stock’s pricing future. But surprisingly it doesn’t perform much better than dollar cost averaging!
“how much better off would you be if you could buy at these absolute bottoms? If you only bought the Dow at the lowest possible price and saved up cash in between purchases, how much would this outperform buying the same amount every month (i.e. dollar-cost averaging/DCA)? The answer: Buying only at the absolute bottoms from 1970-2019 would outperform DCA by about 22% in total, or 0.4% (40 basis points) annually.”
