IDEAS home Printed from https://ideas.repec.org/a/mup/actaun/actaun_2015063062151.html
   My bibliography  Save this article

Application of the Value Averaging Investment Method on the US Stock Market

Author

Listed:
  • Martin Širůček

    (Department of Finance, Faculty for Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

  • Ivana Škatuĺárová

    (Department of Finance, Faculty for Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

Abstract

The paper focuses on empirical testing and the use of the regular investment, particularly on the value averaging investment method on real data from the US stock market in the years 1990-2013. The 23-year period was chosen because of a consistently interesting situation in the market and so this regular investment method could be tested to see how it works in a bull (expansion) period and a bear (recession) period. The analysis is focused on results obtained by using this investment method from the viewpoint of return and risk on selected investment horizons (short-term 1 year, medium-term 5 years and long-term 10 years). The selected aim is reached by using the ratio between profit and risk. The revenue-risk profile is the ratio of the average annual profit rate measured for each investment by the internal rate of return and average annual risk expressed by selective standard deviation. The obtained results show that regular investment is suitable for a long investment horizon or the longer the investment horizon, the better the revenue-risk ratio (Sharpe ratio). According to the results obtained, specific investment recommendations are presented in the conclusion, e.g. if this investment method is suitable for a long investment period, if it is better to use value averaging for a growing, sinking or sluggish market, etc.

Suggested Citation

  • Martin Širůček & Ivana Škatuĺárová, 2015. "Application of the Value Averaging Investment Method on the US Stock Market," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(6), pages 2151-2160.
    • Handle: RePEc:mup:actaun:actaun_2015063062151
    DOI: 10.11118/actaun201563062151
    as

    Download full text from publisher

    File URL: http://acta.mendelu.cz/doi/10.11118/actaun201563062151.html
    Download Restriction: free of charge
    File URL: http://acta.mendelu.cz/doi/10.11118/actaun201563062151.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.11118/actaun201563062151?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mup:actaun:actaun_2015063062151. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ivo Andrle (email available below). General contact details of provider: https://mendelu.cz/en/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.