How Your Portfolio Is Built To Win During Bad Markets | AWM Insights #133

The S&P 500 is down ~23% year-to-date which has felt like an exhausting marathon.

Would you believe us that the -23% return has been created by only nine days? There are 254 trading days in a market year. 

It’s a silly exercise but if you had the ability to avoid those nine days, you'd actually be up 9% year to date in the S&P 500. 

Unfortunately, these were not nine consecutive days. And more importantly, avoiding the worst days means you risk missing out on the best days all but guaranteeing you destroy your long-term returns.

From 1/3/2000 – 4/9/2020:

Six of the seven best days occurred after the worst day.Seven of the ten worst days were followed the NEXT DAY by either top 10 returns over the 20 years OR top 10 returns for their respective years. 

Given this reality, if someone leaves the market after experiencing a poor return, it is literally impossible for them to get invested in time to benefit from the best day that may follow. 

Over that same period if you stayed fully invested you would have earned 6%. However, if you were to miss only the 20 best days you would have wiped out your entire return. There are 7,398 days over that period.

The cost of being wrong is catastrophic. It’s not just that you don’t earn the returns you deserve it’s that you have less money putting at risk your ability to pay for your priorities. 

It’s why we don’t player a loser’s game of attempting to predict the market. 

We use the power of data and evidence to build your portfolio to earn higher expected returns and provide you with the highest confidence to achieve your priorities. 

The key to staying in the market during difficult periods is know your portfolio has been built knowing in advance these periods would come. 

Listen in to hear how your protective reserve is uniquely customized and the role bonds play in your portfolio.