Wed 11/22/06 Updates & Dollar Cost Averaging

Since today is 11/22 and the date for the many indices we now use for our basis was 9/22 I thought it would be interesting to determine whether dollar cost averaging would prove to have any benefit for two stocks which have either taken a hit as with Humana (HUM) or stayed relatively unchanged such as Worthington (WOR)

I'll be considering 3 equal investments made on 9/22, 10/22 and 11/22 (or the previous trading day if one of those days falls on a weekend or holiday)

For Worthington the price per share on those dates would have been as follows

09/22 18.16
10/22 16.99
11/22 18.30

The number of shares purchased w/ $50 investments would be

09/22 2.7533 shares
10/22 2.9429 shares
11/22 2.7322 shares

for a total of 8.4284 shares which would be worth $154.24 today this is a gain of 2.8267% or an equivalent of
$102.83 while a single investment of $100 on 9/22 would be worth
$100.77 or a gain of only 0.77%. If we annualize these returns we find the following differences.

Dollar Cost Averaging = 11.31% annualized
Lump Sum Investment = 3.08% annualized
===============================================
Now, we'll consider Humana and, at this point, I don't know what the outcome will be.

For Humana the price per share on the three dates were
09/22 $65.45
10/22 $66.50
11/22 $52.77

Then we'll consider the number of shares bought with equal investments of $33.33, $33.34 & $33.33.

09/22 0.50924 shares
10/22 0.50135 shares
11/22 0.63161 shares

for a total of 1.6422 shares which, at todays close would be worth $86.66
compared to a lump sum investment of $100 on 9/22 which would be worth $80.63

In Summary for HUM
Dollar Cost Average = $86.66 or a loss of 13.34%
Lump Sum Investing = $80.63 or a loss of 19.37%

Two real life examples where dollar cost averaging (DCA) increased gains in one example and reduced losses in another example. From theoretical thinking I believe the only way to lose with dollar cost averaging is if a stock price goes up every single month which, however unlikely, would simply result in a smaller gain with DCA then if the stock were bought with a single lump sum. DCA - it can be a great way to invest!

Major Markets; DWDI, LISA, SPDRs & Diamonds Day Ending Scores

Market	% Change	Value
Dow	+0.04%	12,326.95
S&P 500	+0.23%	1,406.09
NASDAQ	+0.45%	2,465.98
.	.	.
DWD Indexes	.	.
DWDI	+0.31	1,071.40
LISA	+0.36	1,056.88
Warm & Fuzzy	+0.15	1,109.74
Ambitious	+1.09	1,067.42
SoGo 7 Index	+0.47	1,172.54
.	.	.
Benchmark Indicies	.	.
Diamonds DIA	+0.08%	1,053.42
Spiders SPY	+0.20%	1,071.88

Personal Portfolio - Taxable	+0.05
Personal Portfolio - Retirement	+0.42
Skip's List	+0.46

Daily recap for the 10 Stocks that make up the Dollar Wise Decisions Index (DWDI)

Stock	% Change	Value
Anheuser-Busch	0.32	98.66
Biomet	0.45	118.37
Fastenal	0.29	98.74
Home Depot	0.47	105.95
Johnson&Johnson	0.26	104.39
Medtronic	0.60	115.60
Microsoft	0.00	112.23
Wal-Mart	0.46	99.46
Washington Post	-0.28	102.56
Wrigley	0.50	115.43

Daily recap for the 10 Stocks that make up The LISA Portfolio

Stock	% Change	Value
3M	-0.21	111.50
Coca-Cola	0.23	107.07
Daimler-Chrysler AG	0.82	121.08
Home Depot	0.47	105.95
Humana	0.57	80.63
Johnson & Johnson	0.26	104.39
Lowe's Companies	-1.11	107.09
Target	1.23	106.55
Toyota Motor ADR	1.23	111.85
Worthington Industries	0.11	100.77

The Seven Stocks in the SoGo 7 Index

Company	% Change	Value
Alleghany Corp (Y)	0.11	125.32
eBay (EBAY)	0.65	129.77
EMC (EMC)	2.80	117.86
Expiditors Intl (EXPD)	-0.57	108.75
Fastenal (FAST)	0.29	98.64
Kinght Trans (KNX)	-0.05	110.53
Western Union (WU)	-0.04	129.91