Few people question the wisdom of a monthly savings scheme. Setting aside a little money every month is perhaps common sense, but it might be hard to substantiate, leading to rather vague expressions like “saving for a rainy day”.

Dollar cost averaging, on the other hand, (which has been around since the 1940’s and results in close to 10 million hits in a Google search) gives the impression of a hands-on advantage.

The idea is that by investing the same amount every period you accumulate more shares, as you can buy more shares when the price is low. Unfortunately, this is based on a misconception about how the stock market should function. But what if there is mispricing? Can dollar cost averaging then actually work?

Assistant Professor Henrik Andersson shares insights from his extensive research in the stock market.

Breakfast served from 07.30.