Value Averaging: The Safe and Easy Strategy for Higher Investment Returns

Contents

Foreword by William J. Bernstein

Preface to the 2006 Edition

Preface to the 1993 Edition

Introduction

1 Market Risk, Timing, and Formula Strategies

RISK AND MARKET RETURNS

Market Returns over Time

Distribution of Market Returns

Risk and Expected Return

MARKET TIMING AND FORMULA STRATEGIES

Timing the Market

Automatic Timing with Formula Strategies

ENDNOTES

2006 NOTE

2 Dollar Cost Averaging Revisited

DOLLAR COST AVERAGING: AN EXAMPLE

SHORT-TERM PERFORMANCE

Over One-Year Periods

Over Five-Year Periods

LONG-TERM PROBLEMS WITH DOLLAR COST AVERAGING

Growth Equalization

SUMMARY

ENDNOTES

3 Value Averaging

VALUE AVERAGING: AN INTRODUCTION

SHORT-TERM PERFORMANCE

LONG-TERM PERFORMANCE AND VALUE AVERAGING

Linear, or Fixed-Dollar, Strategies

Adjusting Strategies for Growth

SUMMARY

ENDNOTES

2006 NOTES

4 Investment Goals with Dollar Cost Averaging

BACKGROUND

Lump-Sum Investments

Using the Formula

Annuities: Periodic Investments

Dollar Cost Averaging and Annuities

READJUSTING THE INVESTMENT PLAN

The Readjustment Process

Flexibility

Down-Shifting Investment Risk

GROWTH-ADJUSTED DOLLAR COST AVERAGING

Exact Formula

Approximate Formula

Readjusting the DCA Plan

SUMMARY

ENDNOTES

Appendix to Chapter 4: Constructing a DCA Readjustment Spreadsheet

5 Establishing the Value Path

VALUE AVERAGING VALUE PATHS

The Value Path Formula

Flexible Variations on the Value Path Formula

Readjusting the VA Plan

A Cautionary Note

An Alternate Method

SUMMARY

ENDNOTES

Appendix to Chapter 5: Constructing a VA Readjustment ...