August 18, 2017
Did you know that missing the 10 best days of the stock market would have reduced your return by 3.68% per year over the last two decades?
Not only that, but six of the 10 best days in the stock market occurred within two weeks of the 10 worst days in the stock market over that time frame. The chart below shows the performance of a $10,000 investment in the S&P 500 from January 2, 1996 to December 31, 2015.
A recent example of this phenomenon occurred after the Brexit vote in 2016. The S&P 500 had its worst day of performance in the aftermath of Brexit, when it fell by 76 points on June 24. By July 8, only 10 days later, the S&P 500 had completely recovered. On top of that, June 26 was one of the top 10 performance days for the S&P 500, during which it posted a 1.47% gain that day. If an investor had sold out of the stock market after Brexit, he or she would have lost out on the recovery and the high performance day.
Our recommendation: Don’t try and time the market in the short term by making major transitions to cash or dumping money into equities—stay with a consistent diversified strategy over time, and rebalance as needed.
Jason Mishaw, MSF
As an associate wealth manager at Willis Johnson & Associates, Jason Mishaw is actively involved in both the Financial Planning role and the Investment Management role. On the financial planning side, he helps to implement customized financial plans for WJA clients. On the Investment Management side, under the supervision of a Senior Wealth Manager, he assesses the financial goals of WJA clients and assists in creating a customized strategy to further those goals.
Jason received a Master of Science in Finance at the University of Houston C.T. Bauer College of Business, a B.A. in economics and a B.S. in biochemistry and cell biology from Rice University.
