The markets have hit record levels since the presidential election.
How many investors converted their equity holdings to cash before the election in anticipation of a post “Trump” election crash?
And what did it cost them?
We know from the attached slide that missing just a few days in the market over the course of one’s investment lifetime can have a dramatic impact on their returns.
The attached slides show the impact of missing just a few days in the market. The first column is the S&P 500 for 1970 – 2015. The fifth column shows what happened to an investor who missed the best 25 days in the market for that 45-year period.
Missing 25 of 16,425 days (0.00152207%) costs the fictitious investor 3.4% annualized over that 45 year period. Not 3.4%… 3.4% per annum!
The bottom line is that the biggest impediment to a successful investment experience is the investor’s behavior – reacting to news about the market and making bad decisions.