The Dollar Cost Averaging Experiment Results thru December 4 – Finish Line in Site

Recall the objective of this experiment is to produce double digit returns by dollar cost averaging into either financial assets or hard assets based on where we are in the cycle.  I contend that we are in the hard asset phase.  Read “The No-Brainer Investment Strategy to Double Digit Returns” for more details. With less than 30 days remaining in the year, achieving our goal is in site.  To date CEF’s return using dollar cost averaging is 14.62%; exceeding our goal and outperforming the S&P 500’s 8.5% return.  The gold stocks represented by GDX are also outperforming the S&P 500.

Let’s hope December is a kind month for hard assets. 

 

Table 1. CEF vs. S&P 500

  CEF S&P 500 CEF S&P 500
  Closing Price Closing Price Mon. Return Mon. Return
1/4/07        
12/4/06 9.71 1409.12  9.97%  2.13% 
11/6/06 8.83 1379.78 10.38% 2.19%
10/4/06 8.00 1350.22 -12.76% 2.82%
9/5/06 9.17 1313.25 0.00% 2.65%
8/4/06 9.17 1279.36 2.80% 0.66%
7/5/06 8.92 1270.91 -2.09% 0.44%
6/5/06 9.11 1265.29 -9.80% -3.58%
5/4/06 10.10 1312.25 24.23% 0.25%
4/4/06 8.13 1309.04 3.57% 2.41%
3/6/06 7.85 1278.26 2.08% 1.05%
2/6/06 7.69 1265.02 8.31% -0.66%
1/4/06 7.10 1273.46    

Note: $1000 invested each month in CEF (total $11000) is worth $12,608 (14.62%).
Note: $1000 invested each month in S&P 500 (total $11000) is worth $11,934 (8.5%).

Table 2. GDX vs. S&P 500

  GDX S&P 500 GDX S&P 500
  Closing Price Closing Price Mon. Return Mon. Return
1/4/07        
12/4/06 42.09 1409.12  9.62% 2.13%
11/6/06 38.43 1379.78 13.80% 2.19%
10/4/06 33.77 1350.22 -19.79 2.82
9/5/06 42.10 1313.25 6.34% 2.65%
8/4/06 39.59 1279.36 0.56% 0.66%
7/5/06 39.37 1270.91 3.25% 0.44%
6/5/06 38.13 1265.29    

Note: $1000 invested each month in GDX (total $6000) is worth $6577 (9.62%).
Note: $1000 invested each month in S&P 500 (total $6000) is worth $6461 (7.70%).
Data starts on 6/5 since GDX was launched on 5/25/06

 

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.

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