If you want to get good investment returns, you can’t miss the market’s best days.
Market performance isn’t smooth. It’s choppy. It doesn’t go up 0.1%, 0.2%, drip by drip. It sometimes makes massive moves, up 5, 6, 7, 8, 9% in a single day.
If you miss those days, if your money isn’t invested when they happen, your investment returns take a massive hit.
A bunch of different institutions have analyzed data from a bunch of different time periods, but the gist is always that if you miss the 10 or 20 best days, your returns will be less than half as good. Or in other words, a large percentage of the gains happen on just a handful days.
This is why attempting to time the market is such a dangerous strategy. Because often these big swings up happen shortly after big swings down.
So the market dips, you sell. And then it rebounds back up, and you miss it. By the time you’re feeling confident and optimistic enough to invest your money again, you’ve already missed a big chunk of the rally.
The better strategy is just to stay invested the whole time. No stressing or guessing over whether we’ve reached the bottom, whether this rally is going to continue or dip back again. That’s a game that’s extremely hard to win and easy to lose.
If you just stay invested, there’s no good guessing required. You get to rest easy knowing your portfolio is going to benefit from the market’s best days.
And that’s more than half the battle.