Dollar Cost Averaging

[douglasw32]

Someone Educate me.

Dollar Cost Averaging with dividend reinvestment ?

In Stocks, good idea for a small investor with limited knowledge.


Also how would it relate to Wagering, isn't it sort of what I am doing, if I have a youbet account, I only bet 6F, Dirt Races for winners over 2yo running for at least a $40,000 Purse where there are more than 1 front runner and at least 8 horses.

If more than one qualifying Race/Track Use the one with the largest purse, if that still produces a tie take the one with the highest morning line favorite, still tied, the one with the most horses, etc

And do this for $5.00 + 25% of any profit from last investment to Win and $15.00 + 75% of any profit from last investment to place.

And I do this every Saturday.

Investing/Reinvesting $20.00 per week + dividends.

And holding until I reach $50.00 then putting that into a interest bearing account and saving it for a rainy day.

Would I be doing the same thing ?

[AAcoolguy]

I think you are talking about dividend re-investment. Dollar cost averaging is when you buy something (stock, gold, silver, etc.) for one price and buy more at another price. The costs are averaged giving you your dollar cost average. If I buy and once of silver at $20.00 an ounce, my silver holding value is $20.00. If I then buy another ounce for $15.00 I average the $20 and the $15. My silver holding value is now $17.50. If the price goes back to $20 I now have $40 dollars worth of silver that I paid $35 for.
Dividend re-investment is just that, any dividend you receive is re-invested back into your investment. With stocks it is a form of compound interest. The more stock you have the more dividend you receive. The more dividend you re-invest the more stock you own, etc. etc.

[douglasw32]

I looked it up...

Dollar cost averaging is a timing strategy of investing (http://en.wikipedia.org/wiki/Investing) equal dollar amounts regularly and periodically over specific time periods (such as $100 monthly) in a particular investment or portfolio. By doing so, more shares are purchased when prices are low and fewer shares are purchased when prices are high. The point of this is to lower the total average cost per share of the investment, giving the investor a lower overall cost for the shares purchased over time.[ (http://en.wikipedia.org/wiki/Dollar_cost_averaging#cite_note-0)

Is this a good way to go about it?

[Robert Goren]

It looks good on paper.;)

[AAcoolguy]

I looked it up...

Dollar cost averaging is a timing strategy of investing (http://en.wikipedia.org/wiki/Investing) equal dollar amounts regularly and periodically over specific time periods (such as $100 monthly) in a particular investment or portfolio. By doing so, more shares are purchased when prices are low and fewer shares are purchased when prices are high. The point of this is to lower the total average cost per share of the investment, giving the investor a lower overall cost for the shares purchased over time.[ (http://en.wikipedia.org/wiki/Dollar_cost_averaging#cite_note-0)

Is this a good way to go about it?

So wouldn't that just be flat betting? Sometimes you will be betting on low priced horses and sometimes high priced horses, so you would be "odds averaging".

[shouldacoulda]

I may be misinterpreting this, but are you talking about betting on horses to make money to put in the bank? I personally would (am) try to make my "bankroll" bigger (through successful betting) to the point you can increase the wager size and keep the percentage used per "session" the same. Handicapping is one thing, money management is a whole other thing. Kinda like what putting is to golf.

[DJofSD]

Dollar cost averaging is a method of purchasing an issue, whether it be a stock or a mutual fund, on a regular basis, regardless of the current price. The assumption is the issue is held for a long period of time. Betting on the horses is on a race by race basis. Once the race is over, you are not "invested" any longer.

So, in order to use the same approach of dollar cost averaging for a horse race, you have to make those purchases during the betting period of each race.

[douglasw32]

Ahh so it would be more like betting based on odds in said race, more on low odds, less on high, like dutching ?

And no I am talking about actually buying stock this way, I was just asking if there is any way to use the approach in horse racing and if anyone knew if it was a good idea in stocks ..