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It’s the night of February 23rd and Russia is on the verge of invading Ukraine. The closing bell just rang, and every news source is talking about the pending invasion.

CNBC just announced that the S&P 500 is down for the fourth consecutive day. Headlines like this make me think about missing the best days in the market – yes, I’m thinking about up days when the market is down.

It sounds counterintuitive, but the best market days are often intertwined with the worst. In fact, in the past 20 years, 50 percent of the S&P 500s strongest days occurred during a bear market.

To visualize this, I looked at the best 20 and worst 20 market days in the prior 12 months. Green represents up days, with red representing down days. The numbers inside the colored blocks represent the performance ranking of the trading day, i.e., green ‘1’ would represent the best one-day return of the year and red ‘1’ the worst one-day return of the year.

Source: Deep in the Trenches

You can see that the best and worst days are often clustered together. Taking it a step further, I used the same criteria, but over the trailing 3-years. 15 of the best and 15 of the worst days occurred over three months – though not surprising if you remember the COVID crash.

Source: Deep in the Trenches

It’s impossible to know which trading day will be the worst. Even if you try and catch that falling knife, it’s also likely you’ll be on the sidelines during one of the best days. So let’s look at how missing the best days can affect portfolios that track the S&P 500.

Feb 24, 2021 – Feb 23, 2022

Source: Deep in the Trenches
Source: Y-Charts

Missing just 4% of the best days reduced your performance by 18.72%. While it’s unlikely that you’d missed the 50-best days over the last year, it’s a good reminder that returns are often more about time in the market versus timing the market.

Trailing 3-Years

Source: Deep in the Trenches
Source: Y-Charts

While it may have been uncomfortable to stay fully invested over the last 3-years, had you, you would have averaged a 17.1% return annually. Missing just 10 of the best days, your average return is negative. If somehow you avoided the 50 best days, your account is down over 84%.

Trailing 5-years

Source: Deep in the Trenches
Source: Y-Charts

The S&P 500 is up over 78% in the trailing 5-years. Missing 10 of the best days – you’re barely beating inflation. Your real return is likely negative with the high inflation over the last 12 months.

Data will rarely right side your ship, but it may allow you to reflect. For example, did you make any emotional investment decisions in March 2020? If so, do you regret the decision?

In times of uncertainty, focus on what you can control.

If you’re still working – continue to fund your accounts, make sure your asset allocation is aligned with your risk tolerance, and don’t let emotions cloud your judgment.

If you’re retired and are relying on your investment ‘nest egg’ for income, consider whether your ‘rainy day fund’ (bank account, CDs, etc.) and holding in non-stock market-based investments are sufficient. Additionally, make sure your asset allocation is aligned with your risk tolerance, and don’t allow emotions to cloud your judgment.

Stay cool, stay calm, stay invested.


The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete nor is it a recommendation. Any opinions are those of John Geffert and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.

Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.