Dollar-cost averaging means that you buy equal dollar amounts of a stock every period, for example, $500
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Dollar-cost averaging means that you buy equal dollar amounts of a stock every period, for example,
$500 per month. The strategy is based on the idea that when the stock price is low, your fixed monthly purchase will buy more shares, and when the price is high, fewer shares. Averaging over time, you will end up buying more shares when the stock is cheaper and fewer when it is relatively expensive. Therefore, by design, you will exhibit good market timing. Evaluate this strategy.
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