Re:Stock Market Returns Are Anything but Average
by boringg on Friday April 30, 2021 @10:11AM
(#26993694)
I understand the theory behind it and the uncertainty of timing is an impossible problem to solve.
My point is that holding S&P 500 generally gives you a positive return but if you buy during good years/months and end up having to sell in bad years/months you actually can have a negative return up to a about 15 years (if you really eff the timing up) or get marginal returns (1-2% per year).
Even over 40 years - you probably wouldn't be supper happy with a 100% return - yes things go positive but your returns are much lower if you time the market poorly (obvious statement).
For example buying in 98/99/00 your returns are much worse then buying before or after. Likewise selling in those years gave much higher returns.
Stating the obvious - but worth thinking about. Sell when the market is rich, buy when its soft (like blackjack).
My point is that holding S&P 500 generally gives you a positive return but if you buy during good years/months and end up having to sell in bad years/months you actually can have a negative return up to a about 15 years (if you really eff the timing up) or get marginal returns (1-2% per year).
Even over 40 years - you probably wouldn't be supper happy with a 100% return - yes things go positive but your returns are much lower if you time the market poorly (obvious statement).
For example buying in 98/99/00 your returns are much worse then buying before or after. Likewise selling in those years gave much higher returns.
Stating the obvious - but worth thinking about. Sell when the market is rich, buy when its soft (like blackjack).