Value investors rejoice when the markets go into correction mode. Bcos that means they can pick up good businesses at bargain prices. Logically and intuitively, this makes perfect sense, but somehow our ape-evolved brains are not wired to think that way.
When the markets have rallied for some time and it goes down, we panic. When they subsequently rebound, we curse and swear that why didn’t we buy more during the correction. And when the markets go into correction mode for 3 years, we get totally not interested in the markets. Many don’t ever return to invest, even though it’s the best chance they got against inflation.
So some have come up with a method to counter this flaw and help us invest wiser. It’s called Dollar Cost Averaging or DCA for short. It simply means that you put the same amt of money to buy stocks/UT/index funds etc at fixed time periods. Read more…