Lesson 15: Dollar Cost Averaging is stupid

LESSON 15: DOLLAR COST AVERAGING IS STUPID: DOLLAR COST SAVING ISN'T I read in a book today how Dollar Cost Averaging is the best way to invest. I've read this many times and all I have to say about that is what a stupid pile of horse shit advice that is. That is the dumbest strategy, short of buy and hope, that there is. Let me explain how dollar cost averaging works to screw yourself and then I'll give you a GOOD strategy that makes a billion times more sense. Dollar cost averaging is when you put in X amount of dollars into a stock every month/week/year no matter what price the stock is at and then you average out what you paid for it...so for example lets say you own Disney. That's your stock of choice. The first month you take your $100 and buy Disney at $15. I'll make a little graph: Stock is at $15 you get 6 shares and have 6 shares total Stock is at $16 you get 6 shares and have 12 shares total Stock is at $18 you get 5 shares and have 17 shares total Stock is at $14 you get 7 shares and you have 24 shares total Stock is at $20 you get 5 shares and you have 29 shares total etc...Can anyone tell me why this is stupid? It's stupid because the person keeps paying more and getting less for their money. That's a bad strategy any way you slice it. Here's a better strategy: Stock is at $15 you get 6 shares and have 6 shares total Stock is at $16 you put $100 in a money market and have 6 shares total Stock is at $18 you have $200 in a money market and have 6 shares total Stock is at $14 you take your $300 dollars and buy 21 shares of stock and have 27 shares total Stock is at $20 you take your $100 and put it in the bank and have 27 shares of stock. Sounds like you have less, but you really have more. You now have 2 less shares of stock, but you have $100 cash left. In theory you could buy 5 more shares, putting you 3 shares ahead of the dollar cost averager, or $60 ahead even though you invested the exact same amount of money over the exact same amount of time. I don't know how many times I need to repeat it, but this is very important, YOU FUCK YOURSELF WHEN YOU BUY A STOCK ABOVE THE MOVING AVERAGES! Never do that! Be patient! Throw all the money you want monthly into your trading account, but don't throw it blindly into a stock! By waiting until the stock is at a lower price and keeping in a cash position you can purchase WAY more shares of a stock than by dollar cost averaging. And, if you look back at a previous lesson you would know that the NUMBER OF SHARES YOU HAVE DICTATES HOW MUCH YOU MAKE AND HOW MUCH THE STOCK NEEDS TO MOVE UP FOR YOU TO MAKE GOOD MONEY! That is HUGELY important. 1000 shares of a $10 stock is way better than 500 shares of a $20 stock. They are of equal value, right? But the amount the stock needs to move for you to make the percentage you want is SMALLER. To make 2% that $10 stock only needs to go up 20 cents! For the $20 stock you have to go up 40 cents! Twice as much! Not because of the value of the stock, but due to the number of shares you have. The leverage! And that, my friends, is why dollar cost averaging SUCKS. You will end up with way less shares which equals way less leveraged, which equals the stock needing to go up WAY more to make the same amount of gains and that is dumb.