Do Not Try to Time the Market
Why Time in the Market Beats Timing the Market
I saw the most incredible table the other day. As a business guy, a clean table or chart can really resonate with me.
This table displayed the perils of market timing. Unfortunately, it was in a magazine and I couldn’t find it online. So I tried to recreate it in Excel.
Words really can’t describe the difference between the two returns…but I’m going to try to anyways.
The middle column is the return for the S&P 500 for that decade. The right column is the return for the S&P 500, but it removed the ten days it was up the most.
As you can see, there is a huge swing between the two columns.
To put this into perspective, the market is open about 253 days a year. So in one decade, it's open about 2,530 days. By removing just 10 days, the return for those decades was worse anywhere between 37–129%.
10 days is not even 1% of the days the market is open in a decade. It's not even 0.5%.
Yet the 10 best days had such an impact on the returns for a decade. The consequences of…
