Dollar Cost Averaging in Funds: The Iceland Example (not what you'd expect)

We've looked at the fact the American market history is a one-off  and discussed the possibility that U.S. equity investors might someday replicate the experience of the forex guys who got caught long the shekel in A.D. 70 so that part of this post isn't new but...

From ValueWalk:

Investing In Index Funds? Do Not Look To Iceland

Investing In Index Funds: Ahoy, Polloi by Jared Dillian, Mauldin Economics

Back in the early days of my investing career in the late ’90s, I used to have pretty much all my money in index funds. When I started working on Wall Street, I had a separate pile that I used to speculate on individual stocks, but I still kept the bulk of my wealth in index funds.
In 2008, I lost a boatload of money in those index funds while my trading account, where I’d gone to mostly cash, was much less affected.

After that, I lost my taste for index funds. I called Vanguard, closed the account, and the company mailed a check to my house. I was glad to be rid of it, though at the time I didn’t really understand why.

Here’s Why Index fund promoters like Jack Bogle and Burton Malkiel believe in efficient markets (I don’t, as I wrote here). They believe you can’t beat the index, so you might as well be the index, and you should get exposure to the index by dollar-cost averaging—like, by sending $300 checks to Vanguard every two weeks.

You buy when the market goes up. You buy when the market goes down.

It’s important to have the discipline to buy when the market goes down, but most people find that difficult because they freak out when the market drops. In practice, nobody does dollar-cost averaging properly, except for one guy I knew in the Coast Guard who bought all the way down in 2000 and in 2008. He’s a retired military guy and a millionaire, demonstrating that dollar-cost averaging works… if you don’t chicken out.

But everyone chickens out.

Now, this assumes that markets always go up. You wouldn’t want to dollar-cost average a prolonged bear market.

That’s an interesting question, right? In the US, stocks have always gone up. But elsewhere in the world, dollar-cost averaging would have gotten you in big trouble.

Civilizations rise, but they also fall from time to time. I don’t think we should naïvely assume that US stocks will go up throughout our lifetimes. They might not! I can think of a million reasons why they won’t....

The rest of the post turns into a bit of a polemic but I thought the chart was interesting.