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10 Best Market Days Since 1938
Did you know that the S&P 500 had its biggest 10 day gain since 1938 through March 23, 2009? This is why market timing does not work. Many investors have been panicking and moving to cash recently (according to cash flows leaving the equity markets) and possibly missing those important huge market upswings. These are the days you cannot miss in order to be a successful investor. For example, if you are fully invested in the market (S&P 500) from January 1, 1996 thru December 31, 2006, your return would be 8.33% annualized. If you miss just the 10 best days out of 2,520 trading day during that time, your return drops substantially to 3.32% annualized.
The market is a great wealth creation tool. Yes, the market has been down as a whole for roughly 18 months but market recoveries are historically fast and furious. This is a prime example. If you weren’t in the market for these 10 days or you miss the next 10 day positive run like the one we just had, it quite possibly could make the difference between being a successful investor with market rates of return and an average investor with Dalbar return results. Dalbar is an independent research firm that does massive studies on Investor Behavior. For the time period 1988-2007, the market (S&P 500) had an 11.81% annualized return while at the same time a Dalbar market timing investor had a dismal -1.35% annualized return. Market timing does not work, let the market do the heavy lifting.
