Product Description

Michael Edleson first introduced his concept of value averaging to the world in an article written in 1988. He then wrote a book entitled Value Averaging in 1993, which has been nearly impossible to find—until now. With the reintroduction of Value Averaging, you now have access to a strategy that can help you accumulate wealth, increase your investment returns, and achieve your financial goals.

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Product Details

Publisher	Wiley
ISBN	0470049774
Features	ISBN13: 9780470049778 Condition: New Notes: BUY WITH CONFIDENCE, Over one million books sold! 98% Positive feedback. Compare our books, prices and service to the competition. 100% Satisfaction Guaranteed
Creator	William J. Bernstein
Author	Michael E. Edleson
Format	Paperback
Label	Wiley
Edition	Revised
Dewey Decimal Number	332.6
Studio	Wiley
EAN	9780470049778
Number Of Pages	256
Title	Value Averaging: The Safe and Easy Strategy for Higher Investment Returns (Wiley Investment Classics)
Publication Date	2006-10-27
Manufacturer	Wiley

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Customer Reviews

Better than Dollar Cost Averaging?

Review by W. McReynolds, 2010-05-06

This book shows how to make sure you really buy low and sell high. Dollar Cost Averaging works during asset accumulation phase only. You really have to do the opposite during asset withdraw phase of you life. It works for asset accumulation and asset withdraw phases of life. One drawback is the focus on continuing streams of new deposits. So you have to improvise somewhat if you are just reallocating from a static portfolio that is meant to grow over time. Works best for that portion of portfolio meant to grow. The portion used for withdrawals should be treated strictly from your non-equity "safe money" assets used for short term (<7 years) goals giving time for the long term target to be achieved.

author seems to have biography that I think should be left out of the book. His personal life may bias your opinion of the content of this book.

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It just makes sense

Review by mcmatterson, 2010-03-22

Written in a relaxed, casual, yet thorough style, the book is only a little math-ier than your average investment book. The concept itself seems rock solid, and I will be putting it into practice in the future. Edleson presents a number of ways to modify the system to suit your needs. Highly recommended.

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Good recipe for a mechanical savings plan beating market efficiency by automatic anti cyclic investing

Review by ws__, 2009-10-27

A beautiful book for anyone with a clear savings plan. Everything is explained in lucid details including the necessary basic financial mathematics.

You have to know how much money you need at a fixed time some years into the future (e.g. saving 150000$ for the college in 17 years), you need to have a sufficient regular income to do the necessary savings and finally you need an estimate about the performance of the stock market in the coming years (and the inflation and maybe some more numbers). The book helps you to develop a stock investment plan with a required accumulated stock value at every month or quarter. If the stocks actual value is less than required buy more stocks. If it is more than required sell a sufficient amount. The excess money is parked in the money market until needed for the savings plan. You get a mechanical system that leads to buying at low prices and selling at high prices. A contrarian investment scheme.

The interesting fact is that it worked on historical data and simulated historical data of the US stock market better than an efficient market would naively suggest. It is not proved but probably it would work on any prosperous and judicial save stock market. Very good news.

Before reading this book you might want to consider reading The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk. Also Edlesons "Value Averaging" is quite full of numbers and formulas. This leads to quite dry reading even though everything is clearly explained. A good book for the dedicated with a value averaging compatible goal.

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Simple, effective method for buying low and selling high.

Review by Steven Phillips, 2009-10-07

Value averaging is a simple, effective and workable method for attainment of superior relative performance of one's investment portfolio.

Peer review, such as the following summary, has confirmed the practical merits of this capital-building technique. Combine this method with a Graham-Dodd or J. Dennis Jean-Jacques issue selection approach, and your investment returns have a better than average chance of providing pleasing results over a 3-5 year time span, or longer.

"Journal of Financial and Strategic Decisions
Volume 13 Number 1 Spring 2000

"A STATISTICAL COMPARISON OF VALUE
AVERAGING VS. DOLLAR COST AVERAGING
AND RANDOM INVESTMENT TECHNIQUES
Paul S. Marshall

"Abstract

"As the title suggests, this paper compares two 'formula' or mechanical investment techniques, dollar
cost averaging and a relatively new proposal, value averaging, to a form of random investing to
determine if any technique yields superior investment performance. Results indicate that value
averaging does provide superior expected investment returns when investment prices are quite volatile
and over extended investment time horizons with little or no increase in risk. These results are quite
surprising based on other research supporting the Efficient Market Hypothesis and the fact that any
actual performance attributed to value averaging does not result from any temporary inefficiency in
market prices."

[...]

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Good Content - Likely Hard to Pull Off

Review by L. Rohrer, 2008-03-05

While I believe the concepts in this book would work to enhance returns, (certainly the data shown in the book indicates that it does work), I think it would be hard to actually pull this off.

With conventional dollar cost averaging, you invest a pre-set amount of money (say $100 a month) on a regular basis, an agreement you set up with a mutual fund company in advance. With the Value Averaging approach, you are supposed to invest an amount that will get you a specific amount of money each month, say $100 the first month, $200 the second, $300 the third, and so on. If the market has gone up, you would need to invest less (or perhaps nothing at all, or even have to sell), if the market is down, you would need to invest more. This would likely amount to odd amounts of money invested each month. Certainly, it would help to have an accompanying cash account to pull fund from that is held through the same provided as the fund(s) being invested in, which the author recommends. In prolonged bear market, increasing amounts of money would need to be invested, perhaps eventually more than the investor could afford. In addition, you are supposed to gradually increase your monthly investment as your portfolio grows so the new money coming in continues to be meaningful. The author explains how to do this.

It certainly would take some effort to determine what to do each month, which is vast contrast to the simplicity of traditional dollar cost averaging, which is automatic. In other words, a very good concept, but it would be difficult to make it work in the real world. If you are willing to accept the extra effort involved, and could find a mutual fund company willing to accept odd amounts of money, this book could enhance your investing returns.

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