The £19k cost of trying to time the market (Article)

Thought this might be interesting for anyone sat on the sidelines waiting to jump in.


Forgive my ignorance, is somebody able to explain the concept of “missing the best days” as mentioned in this article?

The days when the share price rose the most.

Well that’s what I’d assumed, but does that not go against the point of the article?

If the point of the article is that one is better just investing an amount an leaving it for X period, rather than tinkering about with it, then how could one miss the best days? If you invest on X date, leave it untouched for eg 30 years, and cash out on Y date, the are the peaks and falls between dates X and Y not rendered meaningless?

The article is against trying to time the market by picking what is assumed to be the best days but in the process missing the actual best days.

I’ve been thinking a lot about this recently and noticed one thing every time I’ve heard the statement and facts about missing the best X days in the market.

In the article it mentions:
Over the last 30 years you could have made:

  • 11.6% per year if you stayed invested the whole time
  • 9.6% per year if you missed the 10 best days
  • 8.2% per year if you missed the 20 best days
  • 7.0% per year if you missed the 30 best days

This data indeed is very insightful and provides justification for leaving your money in the market and continuing to pay in the market.

However, what the article doesn’t say (nor any other article / talk / podcast / etc. that uses the similar facts) is how much money you could have made had you missed the 10/20/30 worst days in the market.

I believe this article contains information bias (is this even a thing?) where the data it gives you only shows one side of the coin.

On that note does anyone have any idea how to get the data of the other side of the coin?

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As a side note there is this article which talks about missing the best and worst 25 days in the market, which is worth a read:

I’m not suggesting timing the market, but the best days are normally followed after the worst days rather than vice versa. So when wary of the stocks about to go down then it may be good to take your money out (yes you can’t time so you will miss some gains) but when it drops, IT DROPS! Then you can buy after the drop and yes you may get hit by more drops (no idea where the bottom is) but then you would still capture the bests days too.

Therefore you would miss some of the good days, you wouldn’t miss the best days but you would miss more of the worst days in the market and thus have a higher return than keeping your money in the market the whole time.

Now I’m not saying this as advice, but this is just my thoughts and would be interested to hear if others think the same.

(Not sure if this post goes against any rules, if so please let me know and I’ll delete or please delete on my behalf)

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The difficult part is knowing it’s about to drop before it drops. People have been saying the market is about to crash for years now, OK so it has finally crashed but who could have predicted coronavirus? (apart from Dean Koontz apparently in some book from years ago :rofl: )

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True, this is my first rodeo so I’m not an expert or anything.

But as soon as I saw the markets going down a little on 26th Feb I sold about 2/3 of my stocks. A few days later stocks rose again but I didn’t buy back in the signs of troubled times were very clear.

I’m currently at 15.49% gains, whereas if I held on I would be 4.41% at this very moment.

Just to add when I did sell I was sitting at around 20% gain and in the previous week to selling it was at around 24.5% so it wasn’t an easy decision to just sell at 4% less than what it was worth a week ago.

I’m not buying back in right now (I feel like it’s going to get worse before it gets better) but if I did I’ve just avoided a 10% loss.

If stocks carried on rising when I had sold would I have regretted it? Maybe, and maybe hindsight is a wonderful thing. But would I have been more annoyed that I told myself it was going to go down and didn’t sell some of my assets? 100% I would have.

But I’m sure at the end of Feb a lot of us on here could see that the market was going to go down further before picking back up again (I mean businesses were confirming that they’ll be making a loss at Q1 and potentially the whole year at this point).

I just want people to be aware yes timing the market is impossible but when warning signs are there you should trust your gut. You shouldn’t just be thinking if I take money out I could miss the best days in the market, you should also think I could miss the worst days in the market.

I feel like I’m saying you can’t time the market but you can time the market at the same time. Maybe I am just talking a load of :poop: but just my thoughts and feelings :sweat_smile:.

That is entirely contradictory - by “trusting your gut” you’re definitely trying to time the market. Even giving it a statistical/analytical basis as per the link you referenced is still aiming to time the market.

That isn’t a criticism but that article also makes clear that you need a large degree of discipline (in fact he cautions against trusting your gut on the grounds that will work against you as often as for you!).

I agree with you that it is contradictory but that’s also why I said.

I also agree with your point here, don’t panic sell but if you feel markets are going to take a downturn I think you should have some form of hedging, or not buy at the current price and/or sell some stock and hold a bit more cash. I believe Mr. Buffett was holding more cash than before also.

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