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The Case for Staying Invested

October 24, 2023


There has been a lot for markets to digest in recent weeks, from uncertainty surrounding third quarter earnings season, surging Treasury yields, political dysfunction in Washington, D.C. and of course, the devastating suffering and loss of life as the conflict in the Middle East unfolds. When market volatility starts to make investors feel uneasy, some choose to step to the sidelines with the thought that they will get back in when things calm down. The chart above shows that historically this is not a prudent decision.


Since 1990, if you missed the top month each year in the S&P 500, you would earn 7% less than if you had stayed fully invested. And that gap widens to more than 12% less if you were to miss the best two months each year. For fixed income, missing out on the best month each year would result in an annualized total return 3% less than if you had remained invested, and over 5% less if you missed the top two months a year.


It’s time in the market rather than timing the market that helps investors meet their long-term investment goals. When attempting to time markets,  investors need to be right twice – once when getting out and once when getting back in. Unfortunately, that is very difficult to do. For most long-term investors, moving to the sidelines can lead to missed opportunities and significant long-term underperformance.


Amid the uncertainty, we encourage clients to stay invested, as the best performing days often quickly follow the worst – a trend we have seen play out over many market cycles.



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