Bar chart compares average investor return with S&P 500 Index return and inflation (2001 – 2020, table lists returns).
|Average annual returns (2001 – 2020)|
|Average investor return||5.96%|
|S&P 500 Index||7.47%|
Bar chart shows the cost of missing the best days in the market, S&P price return October 1991 – September 2021. (Table lists returns.)
|Days in market||Average annual return|
|Remain fully invested||8.40%|
|Missing 10 best days||5.63%|
|Missing 20 best days||3.79%|
|Missing 30 best days||2.24%|
|Missing 40 best days||0.85%|
|Missing 50 best days||-0.44%|
Sources: Top chart: Dalbar, Inc., 20 years from 2001–2020; “Quantitative Analysis of Investor Behavior,” 2021, DALBAR, Inc., www.dalbar.com. Bottom chart: Bloomberg and Wells Fargo Investment Institute. Data from October 1,1991 to September 30, 2021. For illustrative purposes only. Dalbar computed the average stock fund investor return by using industry cash flow reports from the Investment Company Institute. The average stock fund return figure represents the average return for all funds listed in Lipper’s U.S. Diversified Equity fund classification model. All Dalbar returns were computed using the S&P 500 Index. The S&P 500 Index is a market capitalization weighted index composed of 500 stocks generally considered representative of the U.S. stock market. The fact that buy and hold has been a successful strategy in the past does not guarantee that it will continue to be successful in the future. The performance shown is not indicative of any particular investment. An index is unmanaged and not available for direct investment. A price index is not a total return index and does not include the reinvestment of dividends. Total returns assume reinvestment of dividends and capital gain distributions. Past performance is not a guarantee of future results. Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions.
- Market timing is difficult. Investors who allow their emotions to get the best of them can suffer lower returns.
- We do not advocate market timing, but we do believe that modest tactical shifts have the potential to take advantage of short-term investment opportunities or help mitigate short-term risks.