Market Timing Doesn’t Work

29Mar11

Missing Out
The danger of trying to time the market is that you can miss out on days like last Monday, when the Dow Jones industrial average climbed 178 points. That’s because much of the gains for a long-term stock investor come from just a handful of really great days, according to Oppenheimer. It found that an investor who wasn’t in the market on the ten best days from 1980 to 2010 would have earned an annual return of 5.7% over that time. That compares to a 8.2% annual return, a buy-and-hold investor would have earned over that same period.

Annual return for the S & P 500
1980-2010

8.2%

If you missed out on the 10 best days: 5.7%
If you missed out on the 20 best days: 4.2%
If you missed out on the 30 best days: 2.8%

Source: Oppenheimer

Learn more about Ron Sloy.

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