Showing posts from 2014

Does "Cash Drag" Affect Value Averaging Investment Returns?

I would like to announce the release of an investment paper "Does "Cash Drag" Affect  Value Averaging Investment Returns?" The purpose of this paper is to address one of the common comments about Value  Averaging (VA) which is that "VA requires you have a large side fund and the cash  in the side fund causes a drag on the rate of returns a.k.a. “cash drag”". The  argument is that the “cash drag” negates any benefit of higher returns when  compared to Dollar Cost Averaging and Lump-sum investments.    This paper will show that cash is actually a benefit to the portfolio depending on  how an investor manages the cash.   We will also show that cash does not create a drag on returns as most investors  claim, in fact it improves the returns especially over an intermediate time period  of 5 years. A copy of the report can be downloaded at: