The 20 Best Days Over the Last 20 Years
3min video
Timing the market is impossible. To put that into context, let’s look at market returns over the last 20 years, but if you had missed just the best 20 days.
Video Transcript:
As you’ve noticed this month, the market has rallied off the year-to-date lows, with hopes that inflation has peaked. Evident of this was the S&P 500 rallying over 5% and the Nasdaq jumping over 7% in a single day last Thursday. Days like that are why we stay in the game and stay invested.
So, I was curious if you had missed out on only a handful of days like last week but were invested for the rest of the time over the long run. How much would that hurt your long-term returns?
Luckily, JPM has already compiled the data and put it on a chart of us. So, we are looking at the last 20 years of market performance of the S&P 500. So, each year, there are 252 trading days, so over 20 years, we are looking at about 5,000 days, And if you stayed fully invested through the good, the bad, and the ugly over that time- you would have averaged 9.40% per year. Crazy, though, is that as you start to miss days, your average return significantly declines. Twenty days over 20 years is a relative drop in the bucket, but if you had missed those best days, your returns are decimated, and if you missed 30 days, you were better off leaving it in cash the whole time. To make this stat even crazier, seven of the best ten days occurred within fifteen days of the worst days. To say it another way – it’s always darkest before dawn.
Over a sample size of 5000 days, picking which handful are the most optimal to be invested in exactly why it pays to ride out the bad days, because the risk of being out during big up days, like we experienced last week, outweighs the chances of being in during the bad days.
