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This chart shows why investors should never try to time the stock market

johnNjohnN
in Other Investing
This chart shows why investors should never try to time the stock market

https://www.cnbc.com/2021/03/24/this-chart-shows-why-investors-should-never-try-to-time-the-stock-market.html

KEY POINTS
*Investors should avoid the impulse to time the market, new data from Bank of America shows.
Looking at data going back to 1930, the firm found that if an investor sat out the S&P 500′s 10 best days per decade, total returns would be significantly lower than the return for investors who waited it out.

And the market’s best days typically follow the largest drops, meaning panic selling can lead to missed opportunities on the upside.*


Maybe good to sit back and watch market...who know you may outperform your friends whom are day traders

Comments

  • Graust
    edited March 2021
    This gets regurgitated multiple times a year....must be whenever there is excess “volatility” (which of course is “bad” when it’s to the downside, right?)....doesn’t make it any less true, and maybe that’s why it needs to be repeated ad nauseum?
  • FD1000
    Graust said:

    This gets regurgitated multiple times a year....must be whenever there is excess “volatility” (which of course is “bad” when it’s to the downside, right?)....doesn’t make it any less true, and maybe that’s why it needs to be repeated ad nauseum?

    I suspect there are hundreds of articles that get regurgitated and many are bombastic and/or negative.
    How many people would click on an article that says "Markets fluctuate and there is no way to know the future"
  • RbrtRbrt
    But there is good stuff in there - admittedly you have read it before:

    “Whereas valuations explain very little of returns over the next one to two years, they have explained 60-90% of subsequent returns over a 10-year time horizon,” the firm noted. “We have yet to find any factor with such strong predictive power for the market over the short term.”

    Looking ahead Subramanian envisions more muted returns, or about 2% per year for the S&P 500 over the next decade. Including dividends, returns stand at 4%. The forecast is based on a historical regression looking at today’s price relative to normalized earnings ratio.“
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