Always Be in the Market - NEVER BE ALL CASH (Patreon)

Also TLDR billions are made in the bear - like I always say.  Thanks, Josh for sharing. I have made videos on this and will do an update for Josh on BTC :D 

This chart shows the impact of attempting to time the market on the value of a $10,000 investment in the S&P 500 over the period from January 2003 to December 2022. “Timing the market” is an investment strategy where an investor tries to predict market highs and lows and make buying or selling decisions based on those predictions.

The chart shows different scenarios based on missing out on the best days for the S&P 500 during that period:

• Invested All Days: If an investor stayed invested throughout the entire period, their investment would have grown to $64,844.
• Missing the 10 Best Days: If the investor missed the 10 days when the S&P 500 had its highest returns, their investment would only be worth $29,708.
• Missing the 20 Best Days: Missing the 20 best days would result in the investment value dropping further to $17,826.
• Missing the 30 Best Days: If the 30 best days were missed, the investment value would be $11,701.
• Missing the 40 Best Days: Missing these days would mean the investment would be worth $8,048.
• Missing the 50 Best Days: The investment drops significantly to $5,746 if the 50 best days are missed.
• Missing the 60 Best Days: Finally, missing the 60 best days would leave the investor with just $4,205, which is significantly less than the original investment.

There are a couple of key points highlighted in the chart:

• “Seven of the 10 best days took place in bear markets.” This means that some of the biggest gains happened when the market was generally down, which is counterintuitive to what one might expect.
• “In 2020, the second-best day happened immediately after the second-worst day.” This emphasizes the unpredictability of the market and how quickly it can change.

The moral of the story provided by the chart is that trying to time the market is risky and can result in significantly lower returns. In fact, as mentioned in the chart, “Investment returns are 93% lower if the 60 best days in the market are missed.” This suggests that staying invested over the long term, rather than trying to predict the best times to enter and exit the market, is likely to yield better investment returns.

The takeaway message for investors is that long-term investment, without trying to time the market, tends to be a better strategy for most people, given the difficulty of predicting the best days to be in the stock market.