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Value Averaging: The Safe and Easy Strategy for Higher Investment Returns (Wiley Investment Classics) [Kindle Edition]

Michael E. Edleson , William J. Bernstein
4.2 out of 5 stars  See all reviews (34 customer reviews)

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Book 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.


Editorial Reviews

From the Back Cover

Praise for Value Averaging

"Dollar cost averaging is making a comeback, and Mike Edleson's value averaging approach is dollar cost averaging on steroids. A must-read for serious investors willing to adhere to the principles found in these pages."
—William G. Christie, Frances Hampton Currey Professor of Finance and Professor of Law, Owen Graduate School of Management, Vanderbilt University

"Dr. Edleson's book is truly a classic that needs to be perpetuated. I have spent a significant chunk of my career trying to debunk value averaging, but with no success. I'm a believer!"
—Paul S. Marshall, PhD, Professor of Finance, Widener University

From the First Edition

"Today's best way to invest."
Money magazine

"Value averaging takes dollar cost averaging one step further. Besides buying low, you sell shares when the markets soar."
The New York Times

Michael Edleson first introduced his concept of value averaging to the world in an article written in 1988. To satisfy investor interest, he wrote a book entitled Value Averaging, which further detailed this method. Following the publication of the last edition of this highly sought-after book in 1993, it has been nearly impossible to find—until now. With the reintroduction of Value Averaging, you now have access to Edleson's original work on a strategy that can help you accumulate wealth, increase your investment returns, and achieve your financial goals.

About the Author

Michael E. Edleson is a Managing Director of Morgan Stanley and oversees the firm's equity risk globally. Prior to that, he was Chief Economist of NASDAQ and a finance professor at Harvard Business School. Edleson earned his PhD at MIT.
Includes spreadsheets on a companion Web site: www.wiley.com/go/valueaveraging

Product Details

  • File Size: 4174 KB
  • Print Length: 256 pages
  • Publisher: Wiley; 1 edition (April 21, 2008)
  • Sold by: Amazon Digital Services, Inc.
  • Language: English
  • ASIN: B008L03XGO
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Not Enabled
  • Lending: Enabled
  • Amazon Best Sellers Rank: #255,705 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Most Helpful Customer Reviews
61 of 64 people found the following review helpful
5.0 out of 5 stars A sensible, systematic approach June 1, 2000
Format:Paperback
If you're looking for a get-rich-quick scheme, this is not it. Dr. Edelson is currently Chief Economist for the NASD and was a Harvard finance professor when he published this book. In it he presents a variation of the well-regarded dollar cost averaging method and provides statistical evidence to suggest a 1% annual return advantage over DCA. A key difference is that it will, when valuations are high, employ sales. I think the hidden jewel in this book, though, is his technique for answering the crucial and reoccurring question, "Am I investing enough to meet my goals?" As the cornerstone of all my investments (401K, IRA, and brokerage accts) for several years, these methods have given me peace of mind and solid results. Requires no more than high school math skills, access to a spreadsheet, and as little as 30 minutes every 3-4 months. The noted finance analyst William Bernstein is also a big fan and provides additional perspective on his web site, Efficient Frontier.
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34 of 36 people found the following review helpful
5.0 out of 5 stars Personal Investment Experience With This Book June 1, 2002
Format:Paperback
I bought a copy of this book from the author about 6 years ago and have found it to be the most useful investment manual I have yet discovered. It played an important role in planning for an early retirement, and I continue to use it in maintaing my retirement portfolio. Two chapters will appeal to an investor at almost any level of sophistication--one dealing with a program of dollar cost averaging adjusted for growth in market values, and one outling a system of "value averaging." The first helps investors to keep their contributions on track to meet their investment goals, and the second provides a rational basis for investors to sell shares, if they are so inclined, when the market departs significantly from a projected "value path." Both programs can be adjusted periodically to reflect changed assumptions about probable market returns.
I hardly know how to praise this book highly enough. My own mathematical skills are so poor that I periodically re-read the central chapters to remind myself of the logic I am following. But Edleson helpfully supplies some step-by-step examples of spreadsheet programs that will fully deploy the formulas he explains. This is a first rate book that deserves to be back in print at a reasonable price. But even at [the price], it's worth it.
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29 of 31 people found the following review helpful
5.0 out of 5 stars Graduate course for the AIM investors November 1, 2006
Format:Paperback|Verified Purchase
This book should be of intense interest to followers of Robert Lichello's "AIM" (Advanced Investment Management), "Twinvest", and "Synchrovest" dollar-cost averaging methods from 2 generations ago, but Lichello and Prof. Edleson seem to have been unaware of each other's work (understandable given the lack of an internet at the time; their books lived on different sides of the bookstore aisles, "academic" and "popular" works) and no cross-pollinization took place. In any event, Value Averaging is a graduate-level discussion of all the issues about dollar-cost averaging that the AIM students have been struggling toward.

Value Averaging can be tough going for anybody without solid undergraduate math skills, but is deliberately constructed to be utilized by anybody trained in algebra, so my suggestion would be to read through the narrations for the concepts and then go back to the chapters covering the methods you think you would like to use to attack the math. I would suggest not bothering to construct the Excel simulator unless you really think you are going to get different results than a Harvard professor and former chief economist at NASDAQ did in hundreds of tries.
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15 of 15 people found the following review helpful
4.0 out of 5 stars Rational even though not practical October 7, 2011
Format:Paperback|Verified Purchase
Value Averaging is a way to buy more when market goes low and buy less or even sell when market goes high which is the way it's supposed to be in financial markets. Although I find this approach makes sense and easy to apply, but after did many back testings with various securities, I've found 2 issues which make me reluctant to use this approach.

First, in the long term bull market like in 1990-2000, you may find yourself underinvested and have too much money staying on the sideline because of the nature of the strategy which is to buy less or sell shares when market gets higher. In this kind of market, VA will most likely underperform DCA since it has less number of shares to ride the uptrend due to the fact that some of the shares were forced to be sold along the path (Not to mention dividend opportunity lost by selling the shares). Tried to test VA with a strong bull market like gold and found VA was way underperformed DCA. (Nothing is like DCA'ing on stock like McDonald for decades. The return is just so huge!)

Second, when your position is large and then stumble into strong bear market just like in year 2000 and 2008, you're likely to quickly run out of your buffer money you've been accumulating during the bull market. VA forces you to prematurely throw your buffer money to the bad market long before it hits the bottom and will you have extra money to cover the rest of the shortfall? (something like 20k/month or even more). If you don't, I guarantee the result will turn out worse than what you expect.

I wouldn't say this is good or bad strategy since there's pros and cons in every investing strategy. One should do his own homework before choosing strategy he's comfortable with.
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Most Recent Customer Reviews
4.0 out of 5 stars Great insight and is a book that I am having ...
Great insight and is a book that I am having all the kids read before opening there E*TRADE account and setting up their IRA's.
It is simple and a good read.
Published 1 month ago by E. Hart
4.0 out of 5 stars Great book
Simple and easy to understand. Would be interesting to see how DCA performs with something like a target date fund. Looking forward to building a few excel models.
Published 3 months ago by R. Cannaday
4.0 out of 5 stars One best books on investment strategy I read.
Very good book. Well written. Looks like a very good system. It should be in the required reading. Glad I got it.
Published 5 months ago by Craig Sack
4.0 out of 5 stars Dare When Fear and Fear the Dare
The book is a must for anyone planning, investing in Stocks and Bonds But want to keep money management slow but simple process
Published 5 months ago by atul baride
5.0 out of 5 stars Benefits to regular saving
Helps you understand periodic investment strategy. Learn to estimate the benefits of value investing over dollar cost averaging. Do not delay establishing an investment plan.
Published 6 months ago by Grizz
3.0 out of 5 stars Important Book
It's too complicated with all the math - but, a very important book and concept. I'd rather stand on the corner with a tin cup (to be honest) than have to implement this concept... Read more
Published 9 months ago by Roger
5.0 out of 5 stars Great gift for those who need to get it in gear.
This strategy is safe relative to dollar cost averaging (DCA). So if you plan to invest, it would be wise to consider value averaging (VA). Read more
Published 13 months ago by Greg C. Proctor
4.0 out of 5 stars An Indepth look at VA
I am a numbers guy and love to calculate formulas but this was more like a PhD book on investing. I felt like I needed an MBA to figure everything out. Read more
Published 15 months ago by Irish1977
5.0 out of 5 stars Read the whole thing!
And I'm still not rich. But at least I know that if I take the time and use this value averaging technique, I have a shot at GETTING there. Not to be confused with value investing. Read more
Published 16 months ago by Big Momma
5.0 out of 5 stars Very Informative and relevant today
This book is a classic. Although written some years ago and updated, the information and concepts are still important today for one wanting to grow a portfolio. Read more
Published 21 months ago by Robert K. Evans
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