10 Best Days – A Meme For Every Bull Market

About once a year, I have to address the issue of chasing the “10 Best Days” of the year. Statista recently presented the analysis:

“There is clear evidence that market timing is difficult. Often, investors will sell early, missing out on a stock market rally. It can also be unnerving to invest when the market is flashing red. By contrast, staying invested through highs and lows has generated competitive returns, especially over longer periods. The graphic below shows how trying to time the market can take a bite out of your portfolio value, using 20 years of data from JP Morgan.”

timing the market

The financial media regurgitates this same analysis whenever there is a market correction.

“If an investor were to simply miss the 10 best days in the market, they would have shed over 50% of their end portfolio value. The investor would finish with a portfolio of only $29,708, compared to $64,844 if they had just stayed put.”

What is interesting is that this analysis is almost always the same. We addressed the same in March last year as the market stumbled following the Russian invasion of Ukraine.

Panic selling not only locks in losses but also puts investors at risk for missing the market’s best days.

Looking at data going back to 1930, Bank of America found that if an investor missed the S&P 500′s 10 best days in each decade, total returns would be just 91%, significantly below the 14,962% return for investors who held steady through the downturns.”Pippa Stevens via CNBC

However, as Paul Harvey used to quip, “In a moment…the rest of the story.”