Imagine two investors who start on the same day in January 1993, each holding 100,000.
The first investor does something that feels reckless. She puts every dollar into SPY on day one and then does nothing.
The second investor does something that feels wise. He splits his money into 406 equal pieces of 246.31 and buys one piece on the first trading day of each month. That takes him 33 years. He tells himself that this way he can never buy at the top.
Both of them are holding the same fund through the same history: the 1990s boom, the dot-com crash, the financial crisis, the COVID drop, and the recoveries after each. Only the timing of their purchases differs.
Python Full Code
import numpy as np import pandas as pd import yfinance as yf import plotly.graph_objects as go from plotly.subplots import make_subplots
# ------------------------- # Parameters # ------------------------- SYMBOL = "SPY" START_DATE = "1900-01-01" # Yahoo returns data from the first available day END_DATE = None # None = up to the latest available day TOTAL_CAPITAL =…
Interesting analysis, but did you also account for investors who don't have the full capital available on day one? Would the conclusion still hold if we considered real-world cash flow and risk tolerance?
