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Spotlight: What if you ONLY miss the 20 Best Weeks in the Market over 30 Years?

The short answer is that your return drops from 8.4% to 3.8%; quite amazing given 20 weeks represents less than 2% of the time! It’s clear that market timing is risky business. Missing just 20 weeks out of 1,590 weeks results in 55% less return.
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We’re being awfully hard on the average investor but make no mistake, we’re the first ones to admit we can’t predict what the market is going to do either. If ever there was a year to show investors that market timing is truly a fool’s errand, it was 2016. Look what happened:

  • Economic slowdown in China
  • Oil fell below $30/barrel
  • Britain voted to exit the European Union
  • Donald Trump was elected

If the average investor had a crystal ball and predicted all of the above, they most likely would have pulled their money and gone to cash waiting for sunnier days. And that would have meant they were on the sidelines for some of the best days of the year. In fact, a significant portion of investment performance came in the last seven weeks of the year despite predictions that a Trump victory would send markets into a prolonged tailspin.

As much as investors like to think they can predict what the market is going to do in the future, there’s a lot of research to show that isn’t reality. “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

Emotions of fear and greed will dictate when investors buy and sell as often (or more often) as any algorithm or strategy. Regardless, both can result in investors being out of the market when considerable gains occur. As shown above, missing out on even a handful of “best weeks” can have lifelong consequences for you and your investments. We know we can’t accurately predict the best time to buy or sell or what the market is going to do in any given week. We’d suggest investors don’t try to do it either.

About the Author:
This article was provided by Assante Wealth Management, 101 McIntyre - sourced from EdgePoint
Investment Group Inc. and Fidelity Investments Canada For over 35 years, Assante 101 McIntyre has been a
leader in providing professional financial planning advice for the North Bay community.

Financial Peace of Mind Starts at Assante, 101 McIntyre (705 476 5422)
 

Assante 101 McIntyre is a branch that is comprised of Assante Capital Management Ltd. (“ACM”) and Assante Financial Management Ltd. (“AFM”) financial advisors. ACM, a registered investment dealer, is a member of the Canadian Investor Protection Fund and is registered with the Investment Industry Regulatory Organization of Canada. AFM, a registered mutual fund dealer, is a member of the Mutual Fund Dealers Association of Canada (“MFDA”), and MFDA Investor Protection Corporation. Please visit https://www.assante.com/legal or contact Assante at 1-800- 268-3200 for information with respect to important legal and regulatory disclosures relating to this notice.

This Content is made possible by our Sponsor; it is not written by and does not necessarily reflect the views of the editorial staff.



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