$38,710, and if an investor missed the 20 days with the largest gains, the returns were cut down to just 3.02%. If the 40 bestperforming days were missed, an investment in the S&P 500 turned negative, with $10,000 eroding in value to just $8,149, a loss of $1,851. Many market timers want to miss the worst-performing days, an even bigger issue than the problem of missing the best days. The predicament, however, is that the worst days are equally concentrated and just as difficult to identify in advance as the best days. If someone could have avoided the worst days, they would have obtained true guru status. Figure 4-3 illustrates the value of missing the worst-performing days in the 20-year period from 1994 to 2013. If the 40 worst-performing days of the S&P 500 Index were missed, an investorâ€™s increased return would have been 893% more than investors who stayed Figure 4-2
Published on Jun 1, 2015
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...