Source: Bloomberg, William Blair Equity Research
The chart shows annualized S&P 500 returns for an invested equity portfolio under five scenarios: investor stays course and misses the 10, 30, 60, 90 best performing days from 1990 to 2022. Using historical performance as a gauge, the chart illustrates the difficulty in predicting short-term market dynamics and the pitfalls of attempting to time the markets. One could argue that missing the worst performing days would have also had a meaningful impact. But the likelihood of successfully timing short-term market entry and exit over a long period of time is low and may come with tax and other implications.
Pitfalls of Market Timing
S&P 500 Annual Growth (%) January 1990 – March 2022