Part 6/7:
An essential assumption underlying the Buy the Dip strategy is the belief that investors can accurately identify market bottoms. However, without foresight akin to possessing a crystal ball, this becomes increasingly unlikely. The study also found that if an investor misjudges a market bottom by just two months, DCA outperformed the Buy the Dip strategy 97% of the time.
Conclusion: The Preferred Strategy
Based on the findings from Maggiore’s study, Dollar Cost Averaging emerges as the superior investment strategy for long-term investors. Its advantages lie not only in its systematic approach, which alleviates the stress of market timing but also in its historical outperformance in various market conditions.