Timing the Market vs. Time in the Market
Hello from Sycamore,
Have you considered changing your investment strategy based on some event that you believe will happen with the idea of changing back after the event? I can think of some questions leading up to this most recent election that we fielded. On Wednesday, as we watched the market climb about 3%, we thought it would be a good reminder that time in the market is more important than timing the market. We believe staying the course is typically the best course of action. The decision you make when emotions are not involved tends to be the best decision in the long run. To illustrate this, we located a graph showing if you were to invest in the S&P 500 for a 20-year time period (1/1/2004- 12/29/2023) and how missing some of the best days in the market could impact your returns.
Impact Of Time Out Of The Market
Table Source: JP Morgan Asset Management. The dollar amount shows the performance of a $10,000 investment between Jan. 1, 2004, and Dec. 29, 2023. Returns are based on the S&P 500 Total Return Index. Indices do not include fees or operating expenses and are not available for investment. The hypothetical performance calculations are shown for illustrative purposes only and are not meant to be representative of actual results while investing over the periods shown. Calculations are gross of fees but include reinvested dividends. Hypothetical performance does not reflect actual trading, liquidity constraints, fees, and other costs and may not account for the impact of certain market factors such as lack of liquidity. Simulated trading programs are designed with the benefit of hindsight. Returns will fluctuate and an investment upon redemption may be worth more or less than its original value. Past performance is not indicative of future results.
We now pose a question to you – how would you know when the time was right to sell or buy? Is it worth it to potentially cut your returns in half if you are wrong? We believe that generally you should stay the course and trust the process.
Thank you for your continued trust and support,
Sycamore Financial Group
*Data not audited
**Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.
***This article is distributed for general informational and educational purposes and is not intended to constitute legal, tax, accounting, or investment advice.***
