Dollar-cost averaging against a lump sum

A lump sum committed at the start of 2018 buys everything at the opening price of that year. The outcome is determined by that single day, and the drawdown that followed is the risk the position carried.

The comparison has no general answer, and the presets above are the quickest way to see why. Move the start point one year and the figures change; the strategy did not. A window that begins at a cycle peak flatters the schedule, because the schedule buys through the decline at progressively lower prices. A window that begins at a trough flatters the lump sum, because the lump sum captures the entire recovery.

What can be said without qualification is narrower: averaging reduces the dispersion of outcomes across possible start dates, at the cost of giving up the best ones. It is a variance-reduction technique, and like every variance-reduction technique it pays for its safety with expected return. The figures on this page are the published record, not a recommendation, and a single window should never be read as a result.

The derived series behind this page — Holding-period returns — carries its own provenance: Each entry measures the return from the close of one calendar year to the close of the year a fixed number of years later, using the curated year-end close series. Periods are non-overlapping within each holding length, so the entries for a given length are independent of one another. The one-year series covers 2010-2025, the four-year series covers 2010-2024, and the eight-year series covers 2010-2020. The early periods rest on the thinly traded 2010-2014 market and should be read as reference points rather than tradable outcomes; the one-year entries for 2010, 2011 and 2013 carry the corrected full-year returns of the canonical table, about 385, 1,437 and 5,463 per cent respectively.