Market Timing

What Happens When You Fail at Market Timing

It’s hard to predict the best days in the markets, and the cost of missing them can be high.

Hypothetical growth of $1,000 invested in US Stocks in 1970.
TOTAL - $138,908
Minus the S&P 500's best-performing day
Minus the S&P 500's 5 best days
Minus the S&P 500's 15 best days
Minus the S&P 500's 25 best days

Note: Based on the total return of the S&P 500 from Jan. 1, 1970 to Aug. 31, 2019.

The missed best day(s) examples assume that the hypothetical portfolio fully divested its holdings at the end of the day before the missed best day(s), held cash for the missed best day(s), and reinvested the entire portfolio in the S&P 500 at the end of the missed best day(s). Annualized returns for the missed best day(s) were calculated by substituting actual returns for the missed best day(s) with zero. Performance data for January 1970-August 2008 provided by CRSP; performance data for September 2008-August 2019 provided by Bloomberg. S&P data provided by Standard & Poor’s Index Services Group. Indices are not available for direct investment. Past performance is no guarantee of future results.

The impact of missing just a few of the market’s best days can be profound, as this look at a hypothetical investment in the stocks that make up the S&P 500 Index shows. A hypothetical $1,000 turns into $138,908 from 1970 through the end of August 2019. Miss the S&P 500’s five best days and that’s $90,171. Miss the 25 best days and the return dwindles to $32,763. There’s no proven way to time the market—targeting the best days or moving to the sidelines to avoid the worst—so history argues for staying put through good times and bad. Investing for the long term helps to ensure that you’re in the position to capture what the market has to offer. 

Shore Point Advisors

This post was first distributed by Dimensionsal Investing. View the original post online.

Shore Point Advisors is registered as an investment adviser with the State of New Jersey. Shore Point Advisors only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Past performance is not indicative of future returns. All investment strategies have the potential for profit or loss. There are no assurances that an investor’s portfolio will match or outperform any particular benchmark. Content was prepared by a third-party provider. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. All expressions of opinion reflect the judgment of the authors on the date of publication and are subject to change.


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