[meditate89]

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if we are talking about strictly passive investments:

1) market timing is not optimal

2) dollar cost averaging is not optimal


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I really don't agree with this- it's just too broad of a statement. It really just depends too much on the investors skill level / objectives. If you mean solely index funds when you say 'passive investments', then I agree with you to a much much greater extent than I originally anticipated- but I see most of the equity purchases I make as passive investments- I'm going to hold them for a very very long time

I would argue that market timing is very important for anyone looking to maximize their returns... Put quite simply, the cheaper the price you pay, the higher your return will be.

Would you rather buy to hold for the next 20 yrs after a 20% increase in equity prices or a 20% decrease in equity prices?

While I'm not going to sit here and tell you I can time or predict the market with any certainty, I can certainly be very patient and wait for a good pitch. I can't really tell you if an index fund is a good pitch, but I could probably figure out if McDonald's was a good pitch.

In fact, there's tons of good buys out there at this very moment.

Make a list of companies you'd be happy to own; check up on them once in a while to see if they're on sale enough to buy- it might take you a while- but probably not in this market.

As for DCA-
I bought a company that represented about 5-10% of my portfolio. I really like the company, and I believe it was trading at a small discount to intrinsic value. This company went down about 15-20% in price. At this time I believed it to be significantly undervalued and acted accordingly; it went up to about 35-40% of my portfolio, mostly through adding new money.

For passive investments you want to DCA on the way down (A more technical approach may only want DCA on the way up!)

So while I'm not going to try to time the buying of an index fund, since they will go up in the long run and I don't want to miss one of the best performing days of the year by not being invested, nor am I going to average into an index fund for similar reasons, I think there are many passive investment opportunities in individual stocks and I think largest returns will be produced by buying troubled / out of favor / beaten down / small / undetected companies and holding them as a passive investment