Equity returns are concentrated in a small number of trading days, often clustered near the end of selloffs. Missing even a few of the best days can remove most of the long-term gain. A $10,000 investment held fully invested from 1988 through 2023 grew to $417,995 over more than twelve thousand trading days. Missing the five best days reduced the ending value to about $264,000, leaving roughly $154,000 behind. Missing fifty best days can cut the final balance from about $418,000 to about $32,000, a 92% reduction. Market recoveries often form a V-shape, with sharp rebounds occurring before fear fully fades.
"He explained how trying to time the market can completely gut a portfolio, noting that missing just fifty of the best days can wipe out a staggering 92% of your long-term gains."
"A basic $10,000 investment that stayed fully invested from 1988 through 2023 grew into $417,995 across more than twelve thousand trading days. If you miss just the five best days out of that entire multi-decade run, your final balance plummets to $264,000."
"The advice to stay invested is a direct consequence of how equity returns are distributed. A small number of trading days carry most of the long-term gain, and those days cluster near the bottom of selloffs, when fear is highest, and the temptation to sell is greatest."
"“Equity markets recover in a V-shape.” Selloffs end abruptly. There is no all-clear bell. The market often posts its biggest single-day gains within a week or two of its worst single-day losses, while sentiment is still terrible."
Read at 24/7 Wall St.
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