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seen Jun 24 '13 at 14:08

Aug
23
answered Sufficient conditions for no static arbitrage
Jun
1
answered Is it ever possible that---because of illiquidity---exercising an out-of-the-money option is better than directly buying the stock?
Jun
1
awarded  Supporter
May
30
comment What is a real world example of negative forward interest rate?
I agree that bonds with negative rates provide examples of this (although the forward bit is not necessary), but I don't think it is sufficient for the Yield curve to be decreasing - in general, the Yield curve will be decreasing at t if the (instantaneous) forward rate at t is below the yield at t. It could still be positive. An example of German bonds with negative yields is here.
May
29
awarded  Teacher
May
29
comment Proof showing that dollar cost averaging always worse than lump sum alternative
@Freddy The definition in the academic literature, the link cited, and even online dictionaries link excludes any strategy that changes due to additional information (e.g. price changes), and it's pretty much due to this that DCA is suboptimal. I don't think that anyone claims that splitting trades into small pieces can have benefits if it incorporates some of this extra information, but then it is not DCA by the commonly used definition. (I don't follow your definition - is the average fixed at the outset, and costed in cash)
May
28
comment Proof showing that dollar cost averaging always worse than lump sum alternative
In the article: "Let’s look at an example of DCA. Lets say you just inherited 20,000 and you decided to invest it in the stock market. Once you have determined a proper asset allocation ... you could invest it all at once or do “dollar cost averaging” into the securities by purchasing a set dollar amount of securities at pre-determined intervals. An example would be investing 1666.67 on the first of each month for 12 months." It seems to me that the DCA described here and in the Constantides paper is exactly periodic investments. Perhaps you should define DCA to clarify your view.
May
28
answered Proof showing that dollar cost averaging always worse than lump sum alternative