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    Generalized Dollar Cost Averaging finance math efavdb.com
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    I think I don’t have the math background to follow this. I have an operational understanding of the γ=0 and γ=1 cases. But what would one do if one wanted to follow a γ=2 strategy?

    I also don’t follow γ=∞ strategy. Wouldn’t you just never buy any stock in this strategy?

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      But what would one do if one wanted to follow a γ=2 strategy?

      Buy 4 shares when the price is $0.50 and buy 1 share when the price is $1.00? And 9 shares when the price is $0.33 and so on.

      I also don’t follow γ=∞ strategy. Wouldn’t you just never buy any stock in this strategy?

      Think it’s meant to mean very large rather than infinite? Tending towards infinity, but actually infinite?

      I think a strategy with very large γ corresponds to holding onto all of your money until the price hits infinitesimally close to zero, then spending all of it.

      As γ rises above 1, you get shares cheaper but your total spending becomes less predictable. With a huge γ, you have no idea if you’ll buy any shares at all but if you do it’ll be for an incredibly low price.

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      Everyone has a system. The house always wins.

      The best advice I found for when you have a lump sum to make an investment is this

      1. If you are OK with your investments going down right away put all the money in at once
      2. If you will be badly affected if your investments go down right away, dollar cost average.