DCA Experiment as of July 5

I have decided to rename the CEF experiment to the DCA experiment since it will include the results of dollar cost averaging into GDX as well as CEF.  It was another difficult month for CEF it lost 2.09%.  However, year to date CEF is still significantly outperforming the S&P 500 8.53% vs. 0.17%.  GDX had a better month returning 3.25% vs. S&P 500 0.44%.

The objective of this experiment is to demonstrate the power of dollar cost averaging.  I believe that it is the best investment strategy for the average investor.  If you are willing to learn technical analysis, you may outperform dollar cost averaging.  However, technical analysis can take a significant amount of time to master.

Table 1. CEF vs. S&P 500

CEF Closing Price Monthly CEF S&P 500
    Return YTD Return YTD Return
1/4/07        
12/4/06        
11/6/06        
10/4/06        
9/4/06        
8/4/06        
7/5/06 8.92 -2.09% 8.53% 0.17%
6/5/06 9.11 -9.80% 13.02% -0.64%
5/4/06 10.10 24.23% 31.62% 3.05%
4/4/06 8.13 3.57% 7.93% 2.55%
3/6/06 7.85 2.08% 6.32% 0.38%
2/6/06 7.69 8.31% 8.31% -0.66%
1/4/06 7.10      

Note: CEF’s return is compounded monthly. S&P 500 YTD is without compounding

Table 2. $1000 compounded monthly into CEF

CEF Jan Feb Mar Apr May Jun Jul
  Return Return Return Return Return Return Return
1/4/07              
12/4/06              
11/6/06              
10/4/06              
9/4/06              
8/4/06              
7/5/06 1256.34 1159.95 1136.31 1097.17 883.17 979.14 1000.00
6/5/06 1283.10 1184.66 1160.51 1120.54 901.98 1000.00  
5/4/06 1422.54 1313.39 1286.62 1242.31 1000.00    
4/4/06 1145.07 1057.22 1035.67 1000.00      
3/6/06 1105.63 1020.81 1000.00        
2/6/06 1083.10 1000.00          
1/4/06 1000.00            

Note: Each month $1000 is invested in CEF. Table represents value of $1000 in subsequent months.
For example $1000 invested in January is worth $1256.34 in July.

Table 3. GDX vs. S&P 500

GDX Closing Price Monthly GDX S&P 500
    Return Return 6/5 to date Return 6/5 to date
1/4/07        
12/4/06        
11/6/06        
10/4/06        
9/4/06        
8/4/06        
7/5/06 39.37 3.25% 3.25% 0.44%
6/5/06 38.13      

Note: GDX’s return is compounded monthly. S&P 500 YTD is without compounding
Data starts on 6/5 since GDX was launched on 5/25/06

Table 4. $1000 compounded monthly into GDX

GDX Jun Jul Aug Sep Oct Nov Dec
  Return Return Return Return Return Return Return
1/4/07              
12/4/06              
11/6/06              
10/4/06              
9/4/06              
8/4/06              
7/5/06 1032.52 1000.00          
6/5/06 1000.00            

Note: Each month $1000 is invested in GDX. Table represents value of $1000 in subsequent months.

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