Dollar-Cost Averaging

Why has there been so much volatility in the stock market?

Volatility is an inherent part of the stock market. It is in its very nature to fluctuate in the short term, but trying to time these shifts is fiscally questionable. Because of these quick market movements, dollar-cost averaging has been a preferred strategy for accumulating assets in a portfolio. Dollar-cost averaging is part of a discipline that has been one of the most effective ways to combat market volatility. 

When will the market bottom?

Bottoming cycles can take weeks, months and sometimes years to establish. By committing all of your money to a single day, you may miss out on even better opportunities just ahead. For example, in the wake of the 2007 housing crisis, the bear market that followed reached its bottom in March 2009. A monthly investment strategy could have accumulated shares on the way down, and purchased nearer the bottom than a single 'buy' order. Strategic positioning for the next recovery wave of the market is where we feel you should be focused.

Long term trends

Emphasizing longer-term trends helps to soften peaks and valleys in the market. Even companies with strong financials can see their stock prices decline at times. Dollar-cost averaging allows us to appreciate the bigger picture of the market, maintain discipline through periods of volatility and take advantage of opportunities as they present themselves.

If you have any questions about implementing dollar-cost averaging in your investment strategy, building assets in today’s market, or concerns about volatility, please get in touch with me by calling our office at 412-373-7667 or scheduling a zoom meeting with me.