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What Has Worked In Investing


What Has Worked in Investing is an attempt to share with you our knowledge of
historically successful investment characteristics and approaches. Included in this booklet
are descriptions of over 50 studies, approximately half of which relate to non-U.S. stocks.
Our choice of studies has not been selective; we merely included most of the major studies
we have seen through the years. Interestingly, geography had no influence on the basic
conclusion that stocks possessing the characteristics described in this booklet provided the
best returns over long periods of time. While this conclusion comes as no surprise to us, it
does provide empirical evidence that Benjamin Graham’s principles of investing, first
described in 1934 in his book, Security Analysis, continue to serve investors well. A
knowledge of the recurring and often interrelated patterns of investment success over long
periods has not only enhanced our investment process, but has also provided long-term
perspective and, occasionally, patience and perseverance. We hope this knowledge will also
serve you well.

Código: Selecionar todos

Mechanics of Value Averaging

Let’s discuss exactly how Value Averaging works. Value Averaging incorporates one crucial piece of information that is missing in dollar cost averaging – the expected rate of return of your investment. You must provide this information for the Value Averaging formula. Having this data allows the Value Averaging formula to “identify” periods of investment over-performance and under-performance. After the investment has over-performed, you will be required to buy less or sell (selling high). After the investment has under-performed, you will be required to buy more (buying low).

The key idea is to create a Value Path which will describe the investment’s target level for each time period. You must simply make the proper investment or sale at each period so that the holdings are equal to the target value. Let’s define our variables and show the formula for the Value Path.
Table 1: Variables t    Time period (can be months, quarters, years, etc.)
Vt    Target value of investment at time period t
C    Target initial contribution per period
r    Expected rate of growth per period of investment
g    Expected rate of growth per period of contribution
R    Average rate of growth of investment and contribution

To simplify the math, we will set R=(r+g)/2. Thus, R is just an average of the growth rates of the investment and the contribution amount.

Now, the formula for the Value Path: Vt = C * t * (1+R)t

Now, you can simply use this formula to generate a Value Path for your investment. There are two different approaches for this depending on your needs. If you have a specific goal in mind, like you need $100,000 in 10 years for your son’s college expenses, you can start with the final value of the Value Path and use that to determine the required value of your initial contribution (C). So, for our example, if we were working with monthly time periods, we would want V120 = 100,000. Then, we solve V120 = C * 120 * (1+R)120.

On the other hand, if you have no specific savings goal but do know the amount of initial contribution that you are comfortable with, then you can plug in a value of C and solve for all the values of Vt.

We would suggest using Excel to create your Value Paths and track your progress. An important thing to remember about the Value Path is that you should remain flexible and update your Value Path if circumstances change. For instance, if the rate of growth for your investment or your ability to contribute changes, you should re-calculate the Value Path from your current point.

The Value Path formula depends heavily on your estimates of the rate of growth of the investment asset. Thus, it’s very important to provide as realistic rates as possible.

Aqui os ficheiros em excel

Ola

As duas estrategias sao muito simples, nao me parece que valha a pena comprar livros para as perceber.

O Dollar Cost Averaging e comprar a mesma quantidade de Dollars de algo, na mesma altura, repetidamente, sem olhar ao preco. Ou seja, comprar 500 euros do PSI-20 em todas as primeiras segundas-feiras do mes independentemente se "esta caro/barato".

O Value Averaging e uma martingale. Se o preco do PSI-20 descer, compra-se mais, se subir compra-se menos.

Nao ha nada de novo. Os nossos antepassados ja utilizavam ambas estrategias.

Abracos

CN

Curioso teres referido este livro porque há umas semanas atrás li um artigo sobre value investing e fiquei com a ideia que, no fundo, era uma espécie de averaging down encapotado nos periodos maus, com as consequências que bem sabemos.

Provavelmente, ou o artigo não era sobre o mesmo tema, ou eu apanhei a ideia ao contrário.

O livro vale a pena ?

PMACS Escreveu:O link não funciona!

Pois não, também fiquei triste, mas já tinha decidido comprar o livro, que é sempre muito melhor que estar a ler no monitor e sai mais barato do que imprimir e encadernar.

Fica aqui para compensar um artigo muito bom acerca do Value Averaging:

A multi-market, historical comparison of the investment returns of value averaging, dollar cost averaging and random investment techniques

O link não funciona!

Michael Edleson first introduced his concept of value averaging to the world in an article written in 1988.
He then wrote a book entitled Value Averaging in 1993, which has been nearly impossible to find—until now.

With the reintroduction of Value Averaging, you now have access to a strategy that can help you accumulate wealth, increase your investment returns, and achieve your financial goals.


Aqui fica ele, free:
Michael E. Edleson, William J. Bernstein, "Value Averaging: The Safe and Easy Strategy for Higher Investment Returns"

Enjoy

EDIT: Dammit! O link morreu!

Fica a recomendação na mesma

Bom documento para quem se quer iniciar no investimento.

This book is written as an appetizer and a brief account of a discipline which is gaining increasing recognition on an international level.

For more detailed information about the subject, we refer to the bibliography at the end of the book.

In short is an uncomplicated account of the procedures behind the administration of institutional
funds and an account of the advantages of sticking to a documented, scientific method.

The theories behind Strategic Asset Allocation are not new. But they are continually being developed and refined. Many people have some knowledge of the basic principles but choose to ignore them, however uncertain the alternative may be.