How Only 10 Days Can Alter Your Investing Future

How Only 10 Days Can Alter Your Investing Future

Let’s take a trip down memory lane.  Imagine the ten most influential days of your life up to this point.

I would assume the day you met your significant other would be up there, perhaps the day that you decided what college to attend and what career you decided to pursue.  Could be the day you got that long awaited promotion.

Now picture this.  How would your life be different if for some reason you didn’t experience those days.  If for some reason you decided, “You know what, I’m not even going to get out of bed today.”

Maybe you had a bad romantic experience that kept you from trying to meet new people.

Maybe you got turned down for a job you really wanted making you not want to pursue another job in that field.

Imagine how different your life would currently be.  What the fear of the unknown could have caused you to miss out on with those special days.  I’d venture to guess that your life would be quite different and not nearly as fulfilling as it is now.

The Difference Ten Days Makes

Don’t you find it crazy that by missing out on only ten of our most impactful days how dramatically different our lives would be?

I guess the main problem is that we have no idea of knowing when those days will occur.

Did you know the exact date you’d run into your future significant other at the coffee shop?  I’d venture to say not.

Investing is No Different

What if I told you that investing was the same way?  That if you missed the ten best days the market had, your future investing self would suffer tremendously for not experiencing them.

Just like the happenings in your life, no one really knows what the market is going to throw at us tomorrow.  Could go up, could go down, could go sideways.  Honestly your guess is as good as mine.

That being said, why would you not stay invested knowing that perhaps the most impactful day in the stock market could be tomorrow.

Why People “Miss Out”

The main reason that causes people to miss out is fear.

As in life, fear that a romantic crush will reject them or fear that if they ask for the promotion they’ll get laughed at by their boss.

Or in investing terms, fear of investing your money because the market is could drop further and further.  This fear can cause investors to sell or pull their money out of the market at the times when they probably shouldn’t be.

Some Historical Reference

In 2008, you know the year the stock market went to hell in a handbasket as they’d say, the S&P 500 fell 37%.  However, even with that aggressive decline, the S&P 500 bounced back stronger the following years.

Around 26% in 2009 and 15% in 2010.

What if after the sharp initial decline in 2008 you threw in the towel.  You took out all the money you had invested in the stock market because you were afraid that you’d lose even more money than you already had.

Trust me, you wouldn’t be alone.  Many people did.

What You Miss Out On

But when you take your money out of the market, you’re giving up the potential to experience those large rebounding upswings.

In fact, some of the best days of the stock market for a 19 year period from 1997 to 2016 were the days following the 2008 financial crisis.

Imagine if you missed those best days of the market because of fear.  I wonder what you would be missing out on…

Well thanks to our friends at Morningstar we can quantify exactly what you would have missed out on.

What happens when you “miss out,” an actual study?

Morningstar, one of the most reputable investment research companies in the world examined S&P 500 returns that spanned from 1997 to 2016, a pretty significant chunk of time to say the least.

They found that if you had remained invested every day for that 19 year time period you would have experienced an average annual return of.. drumroll please:


A pretty darn good annualized return on your investment if I do say so myself.

The Kicker 

Now here’s where things get really interesting.  Well, as interesting as investing can get but hey throw me a bone.

Morningstar then took that same nineteen year time period from 1997 to 2016 and said to themselves, “I wonder what would happen if someone who was invested from 1997 to 2016 missed the ten best days of market return.”

In other words, what if someone for one reason or another decided to pull their investments out of the market for the ten days that the S&P experienced its best returns.

What they found was pretty incredible.  If you missed only the S&P’s ten best days in an entire nineteen year period your annualized return would have been… drumroll please…


The Difference

Let’s compare those returns for a second.

You’re telling me that if I missed only ten measly days in an entire nineteen year time span that my return would drop from 7.7% to 4.0%?

A 3.7% difference in the wrong direction?

Well, yeah..

Pulling your money out of the market for the ten best days would have cost you 3.7% of annualized return over a nineteen year period.

We’re Not Done Yet

Now Morningstar went even a step further and thought to themselves, “You know, that missing ten days study thing was pretty insightful.  But I wonder what would happen if someone who was invested from 1997 to 2016 missed the twenty best days of S&P 500 return.”

Take a guess what happened to your annualized return now.  Yeah you probably guessed correct, it went down further.

From 7.7% to 1.6% to be exact.

So if we miss the ten best days we’d miss out on 3.7% of annual return and if we miss the twenty best days we’d sacrifice 6.1% of annualized return.  Yikes.

And It Only Gets Worse

  • Missing the best thirty trading days from 1997 to 2016 reduces your return from 7.7% to 0.5%, a 7.2% reduction
  • Missing the best forty trading days from 1997 to 2016 reduces your return from 7.7% to -2.4%, a 10.1% reduction
  • Missing the best fifty trading days from 1997 to 2016 reduces your return from 7.7% to -4.2%, a 11.9% reduction

What’s Your Point Jake

Just as in life, missing the limited number of the most impactful days of an investing period can have significant consequences on your investments longer term.

The difference between a successful nineteen year period of investing and an average to below average period of investing may only be a few days.  So rather than trying to guess when those “best” days will occur, why not ensure you experience those “best days” by staying invested throughout the entire period.

After all, do you go about your life cherry picking which days you’ll get out of bed hoping that one of those most influential days come along?

Most likely not and that’s why your investments should probably be no different.

MorningStar Study

Individual investor’s results will vary.  Past performance does not guarantee future results.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

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