Stay the Course!

Mark Twain said, “if you don’t like New England weather, wait a minute”.  The same can be said for the capital markets!  For the 5 days ended November 2, 2023, the S&P 500 (IVV) is up +4.9%!  So, in 5 days you made just about as much as you would have earned in a WHOLE YEAR with U.S. Treasury bills!

Like I said in my October 15 blog post, What Should I Do?, no one can time the market and it is best to “stay the course”:

Finally, why not just sell everything and hold 100% cash at a current 5.50% yield for the next six months?  This could work if you had perfect foresight (no one does, of course) and don’t mind missing any upside when/if the market recovers…

As we all know, aside from the Magnificent Seven, dividend payers (mostly financials and utilities), small/mid-cap, and international/emerging markets have all struggled badly this year and detracted from account performance, but I am expecting that they will recover over time thus rewarding investors who “stayed the course!”

From the chart below, most of the underperforming diversifiers to the S&P 500 (IVV) had a similar rally.  Small- and mid-cap equities, international developed markets and dividend payers all performed comparably with returns close to 5% (except mid-cap that returned 4%).

Of course, there is no telling what the markets will do today (or tomorrow!), but because of these unpredictable blips in performance, it is always best to “stay the course”.  From a market study from the Hartford Funds, trying to time the market can be costly if you are out of the market when these blips occur:

If you missed the market's 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.