Post by Admin on Nov 19, 2021 9:34:36 GMT -5
Most "experts", articles and books about investing tell you that you should avoid timing because if you miss the best days, your portfolio will trail badly.
But, almost none of them tell you that missing the worse days it actually much better. Sure, timing is difficult, but I have avoided the biggest losses. I lost less than 1% in Q4/2018 when the SP500 fell close to 20%. I made money in March 2020 when the SP500 lost over 30%.
Barron's: Timing the Market Pays Off When You Miss the Worst (and Best) Days (www.barrons.com/articles/timing-the-market-pays-off-buy-and-hold-51588186928)
My position is not contrarian for the sake of running counter to the received wisdom. It is data-driven and refutes a bull case based on an excessively simplistic narrative exemplified by a piece in the Orange County Register on April 5: “The annualized return on the S&P 500 Index from January 1, 1987 to December 31, 2019 was 11.28%. Over this 32-year period, if you were out of the market during the ten best performing days, your annual return would have been reduced to 8.85%. If you were out of the market during the 50 best days of this 11,680-day period, your annual return would have been reduced to 3.40%. Staying in the market yields better long-term results.”
Sound familiar? That may be factual but, at best, it is fallacious and only conveys half the story. So here’s the full truth, according to data from Ned Davis Research. From 1979 to mid-April of 2020, the S&P 500 Total Return Index gained 11.23% per annum. Sure, if you missed the best 40 days, returns shrunk to 5.21%. How about if you missed the worst 40 days? Nobody ever talks about that, because you’d be accused of market timing. Guess what? Your returns would soar to 18.83% annually. And importantly, if you missed both the best and the worst 40 days, you actually beat the market at 12.39%.
You can see another source below
Read the following (www.cambriainvestments.com/wp-content/uploads/2018/01/Where-the-Black-Swans-Hide-the-10-Best-Days-Myth.pdf)
Conclusions:
1. The stock market historically has gone up about two-thirds of the time.
2. All of the stock market return occurs when the market is already uptrending.
3. The volatility is much higher when the market is declining.
4. Most of the best and worst days occur when the market is already declining because markets are much riskier than models assuming normal distributions predict.
5. The reason markets are more volatile when declining is because investors use a different part of their brain making money than when losing money.
But, almost none of them tell you that missing the worse days it actually much better. Sure, timing is difficult, but I have avoided the biggest losses. I lost less than 1% in Q4/2018 when the SP500 fell close to 20%. I made money in March 2020 when the SP500 lost over 30%.
Barron's: Timing the Market Pays Off When You Miss the Worst (and Best) Days (www.barrons.com/articles/timing-the-market-pays-off-buy-and-hold-51588186928)
My position is not contrarian for the sake of running counter to the received wisdom. It is data-driven and refutes a bull case based on an excessively simplistic narrative exemplified by a piece in the Orange County Register on April 5: “The annualized return on the S&P 500 Index from January 1, 1987 to December 31, 2019 was 11.28%. Over this 32-year period, if you were out of the market during the ten best performing days, your annual return would have been reduced to 8.85%. If you were out of the market during the 50 best days of this 11,680-day period, your annual return would have been reduced to 3.40%. Staying in the market yields better long-term results.”
Sound familiar? That may be factual but, at best, it is fallacious and only conveys half the story. So here’s the full truth, according to data from Ned Davis Research. From 1979 to mid-April of 2020, the S&P 500 Total Return Index gained 11.23% per annum. Sure, if you missed the best 40 days, returns shrunk to 5.21%. How about if you missed the worst 40 days? Nobody ever talks about that, because you’d be accused of market timing. Guess what? Your returns would soar to 18.83% annually. And importantly, if you missed both the best and the worst 40 days, you actually beat the market at 12.39%.
You can see another source below
Read the following (www.cambriainvestments.com/wp-content/uploads/2018/01/Where-the-Black-Swans-Hide-the-10-Best-Days-Myth.pdf)
Conclusions:
1. The stock market historically has gone up about two-thirds of the time.
2. All of the stock market return occurs when the market is already uptrending.
3. The volatility is much higher when the market is declining.
4. Most of the best and worst days occur when the market is already declining because markets are much riskier than models assuming normal distributions predict.
5. The reason markets are more volatile when declining is because investors use a different part of their brain making money than when losing money.