Value averaging buys the dip by design
DVA mechanically invests more when prices drop and eases off when they rise. It can outperform DCA but demands spare cash exactly when markets are scary. Compare with plain DCA.
Value averaging: DCA with a thermostat
Standard DCA invests a fixed amount each period. Value averaging (VA) instead targets a fixed portfolio growth path — say +$500 of value per month — and invests whatever closes the gap. Portfolio below path after a red month: you buy more. Above path after a pump: you buy little, or even sell.
The effect is mechanical buy-low intensity. Studies and backtests generally show VA achieving a modestly lower average cost than DCA — at the price of unpredictable cash requirements. After a 40% crash, the plan may demand triple your normal contribution exactly when your conviction and your cash are lowest. That's where VA plans die in practice.
Honest comparison: DCA's edge is that you'll actually stick to it. VA's edge is 1–3% better cost basis if you have the cash buffer and the stomach. If you'd skip the big scary buy at the bottom, you don't have a VA plan — you have DCA with extra spreadsheet.