Q: I recently read an article you published earlier this year which purports to show that if one misses just the best ten days in the market over 10 years their average returns will be half that of one who was in the market the whole time. While I may not be quoting the article exactly, I have read numerous articles over the years suggesting the same thing - that time in the market is key to higher returns and that only a few days can significantly impact long term returns. You have suggested the same thing when you speak of cash being a drag on returns and that investing all available cash at one time is better than investing portions over a pre-determined time frame.
On the other hand, you have often spoken of waiting to invest only in companies showing positive momentum or that one could buy partial positions over a predetermined time frame to ensure that there is some protection should that stock price continue to decline. However, both of these strategies seem at odds with the "stay invested for the best long term gains" noted above.
I suspect that staying invested at all times is the best strategy for long term growth and that the go slower strategy is more to help those whose risk tolerances don't allow for paper losses immediately after investing.
Would you agree with my conclusion? Can missing just a few days significantly impact overall gains? And finally. if this is true, how does one incorporate buying only into momentum-positive companies into this strategy?
Appreciate your insight.
Paul F.
On the other hand, you have often spoken of waiting to invest only in companies showing positive momentum or that one could buy partial positions over a predetermined time frame to ensure that there is some protection should that stock price continue to decline. However, both of these strategies seem at odds with the "stay invested for the best long term gains" noted above.
I suspect that staying invested at all times is the best strategy for long term growth and that the go slower strategy is more to help those whose risk tolerances don't allow for paper losses immediately after investing.
Would you agree with my conclusion? Can missing just a few days significantly impact overall gains? And finally. if this is true, how does one incorporate buying only into momentum-positive companies into this strategy?
Appreciate your insight.
Paul F.
