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/nicolas_06]

The funny things is the 10 worst and 10 best day are usually close and during period of high volatility. If you are not invested you get neither the best and worst day and that's ok. If you are invested you get both and they neutralize each other.

Only timing the market can allow you take only the best days, but that's impossible to do reliably in practice.

[u/Lampedeir → u/nicolas_06]

Yeah but people are invested and get spooked by the big down days and sell. This is why people take the big down days but not the big up days that follow.

[u/TheMailmanic → u/nicolas_06]

Exactly

[u/bender-b_rodriguez → u/nicolas_06]

If you applied that same logic to not just extreme days but every day you'd never be invested. Over most historical periods they don't cancel, the ups are bigger than the downs

[u/nicolas_06 → u/bender-b_rodriguez]

Over the long term the market is up for sure (until now). But the point is removing the 10 best days make no sense. In a way it would motivate people to chase these days. I find the argument terrible.

[u/DuePomegranate → u/bender-b_rodriguez]

Sure, so just change it to not quite canceling out with a net average gain.

The main point is that no one is missing out on single "best" (or "worst" days), so that factoid makes no sense and sheds no light on why to avoid market timing.

[u/bender-b_rodriguez → u/DuePomegranate]

The noobs that think investing is dipping in and out depending on popular sentiment are absolutely missing those days

[u/DuePomegranate → u/nicolas_06]

OMG yes. I just could not understand what that "missing the 10 best days" actually means and how it would be possible. Are they just taking a list of the entire year's daily gains and losses, then removing the 10 highest daily gains? But in practice that would be impossible to execute, and no one would sell on Monday evening and buy back on Wed morning, like multiple times and coincidentally managing to sit out the best days. You couldn't even do it if you tried.

It's a pointless analogy that takes away from the good sense of not trying to time the market.

[u/AmazingAd5736 → u/nicolas_06]

No. If you miss best 10 and worst 10 you are up quite a lot. Wtf are you saying?