Letters to the Editor
To the Editors:I think theres a better way to state Robert Muksians conclusion on when to invest (The Best Day of the Year to Invest in the Market, February 2006 AAII Journal): Invest as soon and as often as money becomes available. Since even monthly low days cant be known until after the fact, the only strategies he analyzes that can be implemented are to invest fully the first day of each year or to spread that years investment out over the first or last days of the months during the year. Youd think that dollar cost averaging over the year would have some benefit, but whats happening is that investable funds are being kept out of the market, on average, for five months using the first-day-of-month strategy and for nearly six months using the last-day-of-month strategy. Since the average yearly return of the S&P 500 from 1982 through 2004 is around 10.5%, youd expect both these strategies to underperform the first-day-of-year strategy by around 5%, which is almost exactly what Muksians analysis shows. So the best investment strategy, at least for investment in the broad market, seems to be if youve got it, invest it.
Hamilton W. Arnold
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