Don't Attempt to Time the Market



Market corrections often cause investors to abandon their investment plan, moving out of stocks with the intention of moving back in when things seem better—often to disastrous results.

The chart below compares the 15 year returns of equity investors (S&P 500® Index) who remained invested over the entire period to those who missed just the best 10, 30, 60 or 90 trading days:

  • The patient investor who remained invested during the entire 15 year period received the highest average annualized return of 8.0% per year.
  • The investor who missed the best 30 trading days over this 15 year period saw his return turn negative to -2.6%.
  • Amazingly, an investor needed only to miss the best 60 days for his return to continue to plummet.

Investors who understand that timing the market is a loser's game will be less prone to reacting to short-term extremes in the market and more likely to adhere to their long-term investment plan.


The Danger of Trying to Time the Market
(15 Year Average Annual Returns, 1995-2009)

Source: Bloomberg and Davis Advisors. The market is represented by the S&P 500® Index.Investments cannot be made directly in an index. Past performance is not a guarantee of future results.



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Davis Advisors investment professionals make candid statements and observations regarding economic conditions and current and historical market conditions. However, there is no guarantee that these statements, opinions or forecasts will prove to be correct. All investments involve some degree of risk, and there can be no assurance that Davis Advisors' investment strategies will be successful. The value of equity investments will vary so that, when sold, an investment could be worth more or less than its original cost.

The chart in this report is used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.

The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in an index.

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