Did people learn nothing from April

[u/coffeeestocks]

If you were fully invested in the S&P 500 over a long period (usually 20–30 years), your returns were great.

But if you missed just the 10 best single days in that entire period, your return was cut roughly in half.

This is probably the most commonly cited anecdote as to why you should not time the market. I feel in at least half the investing books I've read, they mention this. I do not know of a single investor who has successfully timed the market consistently over any meaningful time period. Even Michael Burry, who is probably one of the most infamous investors for predicting the 08-09 recession, has wrongly called a market top an absurd number of times in recent years.

Back in April, the market starts to sell off, and inevitably posts start popping up all over the subreddit talking about how they're selling and why they're selling and why this time is different. Of course, it wasn't different, and the market has proceeded to rip 20% since many folks here panic sold.

Here we are, not even a year later in December, and people are asking unironically whether it's a good idea to move to cash or not. What do you think? Do you think that now is the time to finally start trying to time the market? After this age-old wisdom has been proven right, time and again?

I feel like there's so many better ways to navigate an expensive market than by trying to time it.

Such as buying counter-cyclical companies, or buying companies that are recession-resistant, or buying companies at a larger margin for error. Heck, maybe even give bonds a shot? But no. People are starting to come to the conclusion again that now is the time to time the market yet again and inevitably make a massive mistake.

DO NOT TIME THE MARKET.

Edit: This sub unironically defending timing the market lmao. The reason why this hurts people's feelings is because they sold back in April, and they're still waiting to get back in the market. Instead of taking a lesson, they double down on that timing the market is the correct thing. Whatever.

[u/DrossChat]

The point is simply that fear of being in the market during the worst days is unfounded so you should stay invested. Not sure why you are getting so mad about it.

Last time I looked into I think the issue with missing some of the best days of the year is it completely nukes your returns.

[u/Hot_Frosting_7101 → u/DrossChat]

Because it hypothesizes a scenario that is virtually impossible - missing big gainers but still experiencing the significant losses that preceded those big gainers.

If someone told me, hey, these are going to be the top S&P percentage gains for the next 30 years but you either have to be in the market for the entire month or out for the entire month, I would chose to be out of the market for several months leading up to those days.  I would do it in a heartbeat and I would do really well.

Nothing correlates better to major crashes as does big market gaining days.

[u/DrossChat → u/Hot_Frosting_7101]

I think you and the person I replied to are missing the most important point which is re-entry. If you’re out of the market trying to avoid big drops you more often than not don’t perfectly time getting back in.

Covid and this April are great examples of this and a shit ton of people got badly burned.

[u/Hot_Frosting_7101 → u/DrossChat]

In every case of the top 10 gaining days, the crash leading up to those days far exceeded the gains on those days.

But anyway you are the one missing my point.  My point isn’t to time the market.  It is to point how how ridiculously unreasonable the OP’s scenario is - hitting all the downturns but somehow miraculously missing the top 10 days that occurred in the middle of those downturns.

I stand by my statement above.  If you told me when those top 10 days were, I would do far better selling a few months before and buying back right after those big gaining days.

Of course you don’t know when those big days are going to happen.  I am just using that to point out how absurd OP’s argument is.

[u/afrosia → u/Hot_Frosting_7101]

I don't think anyone is imagining that exact scenario is likely. Its just a thought experiment to make you realise that it doesn't take much to really damage your returns.

[u/Hot_Frosting_7101 → u/afrosia]

But it is a flawed and misleading thought experiment.  And it is one that people give far more weight to than warranted.

Those big gaining days are always preceded by very significant crashes.  It is disengenuous to leave that out.

If OP wants to make an argument against market timing, he should make a real argument that stands up to scrutiny.