For those who are waiting to get back into the market...

[Koolau]

The (very date selective) stay in the market statistics are always from firms with a vested interest in keeping you in the market. LOL.
One has to have their own strategy which may include rebalancing, changing your allocation as you age, your risk tolerance changes or other life factors come into play.

Yeah, I always chuckle when the gold guy or the silver guy on TV shows a big period of run-up. I've stopped yelling at the screen and just turn down the sound now.

I agree about strategy and agree that it includes the items you mentioned. But hopping in and out of the market based on fear or greed is not (IMHO) a strategy. DW read something a few years back and decided she wanted out of all her equities. A couple of years later I showed her how much she had lost and she jumped back in. I'm hoping "lesson learned" but YMMV.

 

[Time2]

The JP Morgan analysis had a similar finding: Someone who invested $10,000 in the S&P 500 on Jan. 1, 2002, would have a balance of $61,685 if they remained invested through Dec. 31, 2021. By missing the market's 10 best days over that 20-year period, they would have $28,260.

I related this to my son who will put $25k* (maybe more) of his $50k income into stocks this year. He said what if they missed the 10 worst days?
I know there is no way to do that, but I thought it would interesting to know.
I searched, "What would the S&P 500 return be if you excluded the ten worst days" I didn't get an answer. Any thoughts?


* the $25k is $19k in 401k and $6k in Roth, he may have more savings.

 

[copyright1997reloaded]

I related this to my son who will put $25k* (maybe more) of his $50k income into stocks this year. He said what if they missed the 10 worst days?
I know there is no way to do that, but I thought it would interesting to know.
I searched, "What would the S&P 500 return be if you excluded the ten worst days" I didn't get an answer. Any thoughts?


* the $25k is $19k in 401k and $6k in Roth, he may have more savings.

If I were in my 20's, 30's, maybe 40's I would continue to dump in as much as possible into the market. I am doing it with my own son, age 20, who has 1/3 of his pay going to a Roth IRA. Once that is funded I will have him continue in a regular brokerage account. He has a LOT of years to go, and even if this money is mostly wiped out, time is on his side....and if inflation persists, having equities is better than most of the alternatives.

For someone my age, the decision process is different. My earning years are over, and therefore I need to be more aware of capital risk. I've been negative on the market from the beginning of the year, but even with that I still have close to 50% in equities...

 

[Koolau]

If I were in my 20's, 30's, maybe 40's I would continue to dump in as much as possible into the market. I am doing it with my own son, age 20, who has 1/3 of his pay going to a Roth IRA. Once that is funded I will have him continue in a regular brokerage account. He has a LOT of years to go, and even if this money is mostly wiped out, time is on his side....and if inflation persists, having equities is better than most of the alternatives.

For someone my age, the decision process is different. My earning years are over, and therefore I need to be more aware of capital risk. I've been negative on the market from the beginning of the year, but even with that I still have close to 50% in equities...

Don't forget to plan how you're going to spend all that money before you check out! We occasionally have threads and posts about having "too much" to spend in our life-times. YMMV

 

[Chuckanut]

For this to be a meaningful analysis, it seems like the calculation should also be reported on the value if one was out of the market for the 10 worst days.

It's somewhat meaningless to assume one was in the market for all the down days, and missed all the up days. The conclusion may certainly be the same with a more complete set of data, but it's hard to draw any conclusions when data is cherry picked to support a point.

Cherry picking or no cherry picking, I think the point is that we don't know what those 10 days are until they are in the history books. Up or down, we don't know until it's too late to do anything about it.

 

[Time2]

If I were in my 20's, 30's, maybe 40's I would continue to dump in as much as possible into the market. I am doing it with my own son, age 20, who has 1/3 of his pay going to a Roth IRA. Once that is funded I will have him continue in a regular brokerage account. He has a LOT of years to go, and even if this money is mostly wiped out, time is on his side....and if inflation persists, having equities is better than most of the alternatives.

For someone my age, the decision process is different. My earning years are over, and therefore I need to be more aware of capital risk. I've been negative on the market from the beginning of the year, but even with that I still have close to 50% in equities...

I have told my son we are odds here, I want to sell my shares at the highest possible price for income and he wants to buy shares at the lowest possible price for appreciation. I'm 67 with 70% in equities, but yes I have over saved.

 

[razztazz]

Cherry picking or no cherry picking, I think the point is that we don't know what those 10 days are until they are in the history books. Up or down, we don't know until it's too late to do anything about it.

They usually occur as counter-trend rallies on the way down. Ergo they mean nothing. This canard is older than water

 

[Happyras]

Interesting choice of dates...

An interesting analysis would be one that looks at each 20 year period (across every day not cherry picked dates) and compared results w/missing the 10 best days AND 10 worst days.

If I weren't so busy doing "outdoor" projects in 95+ degree heat, I might just do the analysis for fun.

I just re-read this article;
https://realinvestmentadvice.com/strike-three-the-next-bear-market-ends-the-game/

The chart above exposes the basic realities of math, loss, and time. What becomes much more apparent is that bear markets tend to destroy most or all of the previous advance and has done so repeatedly throughout history.

 

[Markola]

“The stock market goes up, down and sideways, but mostly up.” - Someone I plagiarized or maybe I dreamt that one up myself [emoji932].