I recently received the latest
Fidelity Viewpoints newsletter.
One of the articles referenced in the newsletter is titled
"6 reasons why you should consider investing right now."According to this article,
"a hypothetical investor who missed just the best 5 days in the market since 1988
could have reduced their long-term gains by 37%."I've read many articles over the years which draw similar conclusions, but still find it amazing
that being out of the market for only a few days has such a detrimental effect on long-term returns.
This is just one reason why I don't try to time the market!
https://www.fidelity.com/learning-center/wealth-management-insights/reasons-to-invest-now
Comments
Read my link
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.
Timing is difficult but not impossible.
* Beating the SP500, especially when you have a large portfolio, is not always the goal. Since 2000, my goal has been to have the best risk/reward performance.
* When US LC doing well, it's usually the best risk/reward category. But, over long time, think 2-3 decades; it's definitely at the top or best. So why do most investors don't use the SP500 as their only stock choice? After all, Bogle and Buffett recommended it for decades.
* After years of tweaking, exploring and trading, I concluded that timing works very well with slower bond OEFs, and not great with higher volatility categories. Read (link).
This is how Vanguard got so big, but millions still trade, go figure.
Many times the investors who don't know much and do nothing, out perform the ones who know more and trade, including pro fund managers.
I also have been saying for years that investment sites encourage people to trade more.
The most revealing are small and often trades without impact.
A lot of the wisdom was lost in the technology age.
Divvies don't matter as much; the biggest tech companies don't pay much or none and had the best performance.
Finding hidden gems isn't easy with the internet.
Just because something is overvalued, it doesn't mean it can't continue for years to come.
Warren Buffett’s Berkshire Hathaway dumps $75.5 billion worth of stock and halves Apple stake
”Berkshire Hathaway Inc. slashed its stake in Apple Inc. by almost 50% as part of a massive second-quarter selling spree that sent billionaire Warren Buffett's cash pile to a record $276.9
billion.” (Fortune - August 3, 2024)