The debate between value investing vs DCA (dollar-cost averaging) is a crucial one for long-term investors. Some believe that waiting for a 30% drop before buying stocks ensures they never overpay. Others argue that consistent investing (DCA) over time leads to better returns.
But do high-quality stocks like Apple (AAPL), Visa (V), Mastercard (MA), and S&P Global (SPGI) actually drop 30% very often? The answer is no—which means waiting for a big dip might cause you to miss years of compounding growth.
So, should you hold cash and wait for a major market crash, or is it smarter to invest consistently over time? In this article, we’ll compare value investing vs dollar-cost averaging, analyze historical stock data, and determine which strategy works best for long-term investors.
What Is Value Investing?
Value Investing vs DCA: How Value Investing Works
Value investing is the strategy of buying stocks when they are trading below their intrinsic value. This approach, made famous by Warren Buffett and Benjamin Graham, involves:
✅ Finding undervalued stocks using fundamental analysis.
✅ Waiting for a stock price drop before buying.
✅ Holding the stock long-term until the market recognizes its true value.
Investors use key metrics like:
- Price-to-Earnings (P/E) Ratio
- Price-to-Book (P/B) Ratio
- Discounted Cash Flow (DCF) Analysis
These help determine whether a stock is trading at a discount compared to its fair value.
👉 Related: The Basics of Value Investing
What Is Dollar-Cost Averaging (DCA)?
Value Investing vs DCA: How DCA Works for Investors
Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount at regular intervals, no matter what the market is doing. Instead of waiting for the perfect price, DCA lets investors build wealth by consistently buying shares over time.
Why DCA Works:
✅ Reduces risk of buying at market peaks.
✅ Removes emotions from investing decisions.
✅ Ensures steady participation in the market.
DCA is especially effective for high-quality stocks that rarely experience deep selloffs because it allows investors to build positions without worrying about market timing.
👉 Related: Embracing the Dollar-Cost Averaging Investment Strategy
Value Investing vs DCA: Do High-Quality Stocks Drop 30% Often?
Many investors wait for a 30% drop before buying, believing it will give them the best possible entry point. But let’s look at historical data for some of the most successful stocks.
Apple (AAPL)
📉 Biggest Drop in Recent Years: -32% (COVID-19 crash, 2020)
📈 Overall Trend: Steady long-term growth
Visa (V) & Mastercard (MA)
📉 2020 COVID-19 Crash: Visa (-22%), Mastercard (-25%)
📈 Overall Trend: Consistent earnings growth
S&P Global (SPGI)
📉 Rarely drops 30%—only during major crashes
📈 Steady long-term growth
The Reality: You’ll Wait a Long Time for a 30% Drop
If you waited for a 30% drop in these stocks over the past decade, you would have had few (if any) opportunities to buy—potentially missing out on significant gains.
👉 Related: Why Waiting for a Dip Can Cost You More Than You Think
Value Investing vs DCA: The Cost of Waiting to Invest
Let’s compare two investors buying Apple (AAPL) between 2013-2023:
1️⃣ Investor A (The Timer): Waits for a 30% drop before buying.
2️⃣ Investor B (The DCA Investor): Invests a fixed amount every month.
Who Performs Better?
- Investor A found only one major drop in a decade (COVID-19 crash). They bought shares at a great discount but missed years of compounding growth.
- Investor B, using DCA, bought Apple at various prices over time, benefiting from long-term stock price increases.
Result:
✅ Investor B (DCA) ends up with more shares and a higher total return.
Key Lesson: Time in the market beats timing the market.
Best Strategy: A Balanced Approach
Rather than choosing between value investing vs dollar-cost averaging, a hybrid approach is often best:
✔ Use DCA to establish a position in high-quality stocks.
✔ Take advantage of small dips (5-10%) to buy more aggressively.
✔ Don’t wait for a 30% drop unless the stock has a fundamental problem.
This way, you’re always invested while still being mindful of valuation.
Key Takeaways When Considering Value Investing vs DCA
✔ Waiting for a 30% drop in high-quality stocks is unrealistic—it rarely happens outside of market crashes.
✔ Dollar-cost averaging ensures you are always participating in the market and benefiting from long-term growth.
✔ Trying to time the market can lead to missed opportunities and lower overall returns.
✔ A hybrid approach—DCA with opportunistic buying—is often the best long-term strategy.
By understanding value investing vs DCA, you can choose the strategy that best fits your goals.
Final Thoughts: Which Strategy Wins?
The best investment strategy depends on your financial goals and discipline.
📌 If you believe in the long-term potential of companies like Apple, Visa, Mastercard, and S&P Global, waiting for a massive drop could cost you more than you think.
Instead, focus on buying quality stocks at fair prices and staying invested for the long run.
Happy Investing!