Missing 10 Best Market Days Cuts Annual Returns 40% as Volatility Clusters Gains and Losses
Updated
Updated · A Wealth of Common Sense · Jul 16
Missing 10 Best Market Days Cuts Annual Returns 40% as Volatility Clusters Gains and Losses
1 articles · Updated · A Wealth of Common Sense · Jul 16
Summary
JPMorgan data cited by A Wealth of Common Sense shows missing the market’s 10 best days cuts annual returns by 40%, while missing 30 best days leaves returns at a fraction of the long-term average.
Since 1990, $1 grew to $40 for investors who stayed fully invested, but only to $8 if they missed the 25 best days; missing the 25 worst days instead would have lifted $1 to nearly $240.
Those outcomes are hard to isolate because the best and worst sessions usually cluster during crashes and bear markets, including the dot-com bust, 2008, Covid and the 2022 inflation selloff.
The analysis argues volatility, forced selling, short covering, bargain hunting and herd behavior drive both panic selloffs and sharp rebound days, making market timing especially difficult in downturns.
Bob the "world’s worst market timer" succeeds not by catching rebound days deliberately but by holding through both extremes over a long time horizon.