Missing the Markets’ 10 Best Days and 10 Worst Days

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Oooooohhhhh … I could type forever here … I somewhat incensed by the math+assumptions and the communique of what had a great premise but turned into a commercial.  The point though is, don’t get fooled by the Assumptions in the Analysis.

#1. Market Performance should always be measured from the Previous Peak to Present, so from the Top of the Previous Bull market, through a complete Bear market, to wherever you are today/Present.  The data presented in quote2 below begins after the bottom on the Dot-Bomb, so November 2002 or essentially January 1 2003.  Wrong IMHO.  You can really fudge the math by choosing your start+stop points.

#2.Missing the 10 ‘Best Days’, a few of them occurred during a Bear market, when the Rules had you sit out, is math trickery.  Be careful.  There are also studies that show if you miss the 10 Worst Days of the market, how better off you are.  Caveat emptor.  The original study is from JP Morgan Chase, then re-published on Business Insider, and then over to 5i Research.  Peter at 5i may have the raw data, and once upon a time I found it as well, but you have to be careful about the Assumptions.

During trying market times, always go back to these 5 investing basics

Link: During trying market times, always go back to these 5 investing basics

Quote1 “Most investors worry about whether their stocks are going up. But you should worry more about your dividends. Studies have proven that dividends account for up to 90 per cent of total returns, over time. Your stocks will bounce around like yo-yos, but if your dividend continues to be paid then you will likely end up OK, as long as you do not panic and sell during a downturn.”  <– I won’t debate this and it is probably factual for Buy&Hold but not Buy&Rule.

Quote2 “A Business Insider report took a look at how important the big up days in the market were to investment performance. Results were stunning. In a 10-year period (2003 to 2013) a buy and hold strategy returned 9.2 per cent. If you were out of the market on the 10 best up days, return dropped to 5.5 per cent. If you missed just the best 60 days in a 10-year period, your return dropped to negative 4.4 per cent.” <– Assumptions flaw the logic/reality.  Sad.  I re-looked at the underlying study, and several others on the web, not good, all purported to suit a purpose.