Using Value Averaging on Vanguard's Small Caps Growth (VBK)

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syahriltaher
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Joined: Wed May 15, 2019 9:32 pm

Using Value Averaging on Vanguard's Small Caps Growth (VBK)

Post by syahriltaher » Wed May 15, 2019 9:40 pm

Hi Guys,


This is my first post, and so glad to be here....been reading and admiring all Jack Bogle's books...and also been using Vanguard's ETF such as VBK, VIOG and BNDX....

Been using monthly Value Averaging technique on VBK. Every month I liquidate my position from Vanguard International Bond ETF (BNDX) and transfer the fund to VBK using Value Averaging technique.... So far so good (almost 10% return in 10 months), and within 2 more months I'm going to close my positions and re-start all over again (maybe by using different equity ETF and Bond ETF)....

So what you guys are thinking about my investment method here? Any comments or inputs will be highly appreciated.... :D


Best regards,


Syahril Taher

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Using Value Averaging on Vanguard's Small Caps Growth (VBK)

Post by MotoTrojan » Wed May 15, 2019 11:27 pm

I don’t think you’re doing it right and I’d bet you this lost handsomely to just holding the small growth over the long run. I’m also fascinated by your combo of international bonds and small growth. Why International? Why growth?

The idea is to withdraw enough to maintain your target growth rate, not liquidate everything. I’m not a believer in this method but it’s interesting.

jbranx
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Re: Using Value Averaging on Vanguard's Small Caps Growth (VBK)

Post by jbranx » Thu May 16, 2019 12:23 am

Welcome to the Forum! All I know about value averaging is what Wm. Bernstein has written about Michael Edelson's book on the topic. I have the impression that the technique is best used to accumulate assets over time with buy and hold. So, I'm wondering why, if you appreciate Jack Bogle's writings, you are doing such short-term trading? Secondly, why small cap growth trading vs. a total market or total world fund or just small cap value?

My reaction to your strategy is that it's probably a lot of work, a lot of trading, a lot of expense and maybe a lot of taxes when you could simply build wealth over time by value averaging into a broad stock index fund or ETF. While it may have worked well for these past months, there are plenty of reasons to doubt that this technique is an undiscovered market beater. Here's a link to Edelson's book on Amazon: https://www.amazon.com/Value-Averaging- ... =8-2-fkmr1

Longtermgrowth
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Joined: Thu Nov 26, 2015 1:59 pm

Re: Using Value Averaging on Vanguard's Small Caps Growth (VBK)

Post by Longtermgrowth » Thu May 16, 2019 3:25 am

The general Boglehead view is to hold a constant allocation to stocks/bonds per ones need, willingness and ability to take risk. Just rebalance from one to the other to maintain desired allocation.

Total market funds are the default holding recommendation, but many tilt their stock holdings to riskier small cap stocks. Generally those that do tilt, tilt to small blend or value, and some go as far as to call small growth the black hole of investing. Larry Swedroe and Paul Merriman both advise overweighting small and value: https://www.etf.com/sections/index-inve ... nopaging=1

https://paulmerriman.com/best-in-class- ... portfolio/

Edited to add: Bond recommendations from the two respected advisors mentioned above always looks to be U.S. Treasury.
The Boglehead general recommendation is U.S. Total Bond Index... At least for U.S. investors.

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