Timing the Market: Why It’s So Hard, in One Chart
The recent market volatility may have some people thinking, “Why not just time the market?” Timing the market seems simple enough: buy when prices are low and sell when they’re high.
However, there is clear evidence that market timing is difficult. Often, investors will sell early, missing out on a stock market rally. It can also be unnerving to invest when the market is flashing red.
By contrast, staying invested through highs and lows has generated competitive returns, especially over longer periods.
The above graphic shows how trying to time the market can take a bite out of your portfolio value, using 20 years of data from JP Morgan.
The Pitfalls of Timing the Market
Mistiming the market even by just a few days can significantly affect an investor’s returns.
The following scenarios compare the total returns of a $10,000 investment in the S&P 500 between January 1, 2003 and December 30, 2022. Specifically, it highlights the impact of missing the best days in the market compared to sticking to a long-term investment plan.
As we can see in the above table, the original investment grew over sixfold if an investor was fully invested for all days.
If an investor were to simply miss the 10 best days in the market, they would have shed over 50% of their end portfolio value. The investor would finish with a portfolio of only $29,708, compared to $64,844 if they had just stayed put.
Making matters worse, by missing 60 of the best days, they would have lost a striking 93% in value compared to what the portfolio would be worth if they had simply stayed invested.
Overall, an investor would have seen almost 10% in average annual returns using a buy-and-hold strategy. Average annual returns entered negative territory once they missed the 40 best days over the time frame.
The Best Days in the Market
Why is timing the market so hard? Often, the best days take place during bear markets.
Over the last 20 years, 7 of the 10 best days happened when the market was in bear market territory.
Adding to this, many of the best days take place shortly after the worst days. In 2020, the second-best day fell right after the second-worst day that year. Similarly, in 2015, the best day of the year occurred two days after its worst day.
Interestingly, the worst days in the market typically occurred in bull markets.
Why Staying Invested Benefits Investors
As historical data shows, the best days happen during market turmoil and periods of heightened market volatility. In missing the best days in the market, an investor risks missing out on meaningful return appreciation over the long run.
Not only does timing the market take considerable skill, it involves temperament, and a consistent track record. If there were bullet-proof signals for timing the market, they would be used by everyone.
For additional insight, read “Wealth on Purpose” by Bryan Ballentine.
This was originally posted on Advisor Channel.
Sources: Located at the bottom of the article
Golf Tip of the Week
She was a legendary Olympian and Hall-of-Fame golfer. These 3 golf tips got her started
With Olympic golf looming—the women’s leg of the competition starts this week—I decided to learn up on one of the best Olympian-golfer combo talents of all time: The legendary Babe Didrikson Zaharias.
For those unfamiliar with the brief basics of her career:
- She set four world records at the 1932 Olympic Games.
- She won gold medals in javelin and hurdles, and a silver medal in high jump.
- Zaharias took up golf three years later.
- She became a founder of the LPGA Tour.
- She went on to win 41 times, including 10 majors.
- She made the cut in two PGA Tour events.
How did Babe get so good at golf, so quickly? Her unfathomable athleticism obviously plays a massive role, but a great book called “Wonder Girl” by Don Van Natta shared some other clues which the rest of us may learn from:
- Let it rip
From the moment Babe first picked up a golf club, she wanted to hit the ball far. And she did. Byron Nelson once estimated that fewer than 10 golfers on the planet could hit the ball longer than Babe. She’d routinely bash drives longer than 260 yards.
Babe struggled with accuracy in the early days—especially with her irons—but she knew that could be fixed later.
“A free-swinging Zaharias put power into women’s golf. And shot value, too,” Nick Seitz wrote for Golf Digest back in 2000. “‘I just loosen my girdle and take a whack at it,’ she liked to crack.”
- Look at the ball real hard
Babe had a smattering of teachers helping her with the basics from the very start. She initially used a 10-finger baseball grip, but later switched to an interlocking grip. She also instilled the basics of ball position, stance width, and posture early on.
But one of the biggest basics a legendary teaching pro at the time, Olin Dutra, told her?
“Keep your eye on the ball…look at the ball real hard, that’s the most important thing.”
- Extend left arm
PGA of America
As she started developing her golf swing, Babe linked up with a golf instructor called Stan Kertes. Noticing her natural athletic talent, Kertes wasn’t heavy-handed with any technical changes, but did suggest one important piece of advice, as “Wonder Girl” explains:
“He emphasized the importance of a firm left arm while swinging. The arm must remain straight throughout the swing, he explained, although it didn’t have to be dead straight. ‘If the left arm bends just a little, that’s okay,’ he told her.”
This advice, as we’ve come to understand better in recent years, prevents the arms from collapsing, and promotes more stretch in golfers’ upper body.
A few simple rules. Combine that with some generational athleticism and a few thousand golf balls a day, and you get Babe Didrikson Zaharias.
Tip adapted from golfdigest.comi
Recipe of the Week
Cucumber Pineapple Tequila Cooler
Ingredients
1 cup fresh pineapple cubes
2 limes, skin removed
1 seedless European cucumber, peeled, plus cucumber slices for garnish
4 ounces silver (blanco) tequila
1 1/2 cups ice cubes, plus more for serving
1 tablespoon agave nectar
Pinch kosher salt
Directions:
Prepare a vegetable juicer (or blender if unavailable). Run the pineapple, limes and cucumber through the juicer, letting all the juices combine. Pour the tequila into a cocktail shaker or pitcher, and then add the juices, ice, agave and salt. Shake or stir vigorously until chilled. Line up 4 tall Tom Collins glasses filled with ice, and pour the tequila cooler over. Serve with straws and cucumber slices for garnish.
Recipe adapted from foodnetwork.comii
Travel Tip of the Week
Travel to the Grand Canyon on This 65-mile Scenic Train Ride — Stunning Views and Live Entertainment Included
Out of all the national parks in our country, there are few as recognizable, or as visited, as Grand Canyon National Park. Over 4.7 million travelers made their way to the natural wonder in 2023 alone, solidifying it as the second most popular national park in the U.S. Grand Canyon tourism, however, began over a hundred years ago (even before it was designated as a national park) with the opening of the Grand Canyon Railway.
On Sept. 17, 1901, the first passengers boarded the train from Williams, Arizona, taking them directly to the Grand Canyon South Rim in three hours; prior to the railway, visitors would embark on a lengthy two-day stagecoach journey. In just a couple of decades, though, the invention of the automobile altered the travel landscape forever, especially in this part of the world. As the road trip grew in popularity, so did the number of visitors entering the Grand Canyon by car (instead of by train). By the time the late 1960s rolled around, passenger train service had come to an end — and it stayed that way until Max and Thelma Biegert decided to revive and redevelop the Grand Canyon Railway in 1989. The Grand Canyon Depot officially reopened in 1990.
Today, the Grand Canyon Railway continues to appeal to travelers in search of the canyon’s wondrous views and unforgettable hikes. It’s estimated to carry more than 225,000 passengers every year, resulting in around 50,000 fewer cars entering the park. Both efficient and highly entertaining — expect to see some cowboys and listen to classic Western songs — the Grand Canyon Railway is the perfect way for travelers of all ages to experience the national park and learn more about its history. Here’s everything you need to know to plan a trip.
Route and Schedule
From Jan. 1 through Oct. 31, the Grand Canyon Railway departs the Williams Depot at 9:30 a.m. MST every day. After covering 65 miles, it arrives at Grand Canyon Village on the South Rim at 11:45 a.m., giving passengers over three hours to explore the historic buildings, the canyon, and some of the most popular hiking trails — including the Bright Angel Trail. The train departs at 3:30 p.m., pulling into Williams at 5:45 p.m. Each way takes about 2 hours and 15 minutes, a full 45 minutes faster than the first train that ran from Williams to the South Rim.
In November and December, the schedule shifts slightly. From Nov. 1 through Dec. 31 (with the exception of Christmas Day), the train leaves Williams at 8:30 a.m., arrives at the village at 10:45, departs at 2:30, and drops passengers back at the original destination at 4:45 p.m. On select days, when demand is high, a second train may run; travelers will need to check the schedule to see availability.
Tickets and Reservations
In 2024, adult round-trip ticket prices range from $69.98 for Pullman class to $239.98 for the Luxury Parlor. Children’s tickets (ages 2-15) vary from $35.98 for Pullman class to $189.98 in the Observation Dome. Children under the age of two ride for free in Pullman, Coach, and First classes, but they aren’t allowed in the Observation Dome. Passengers under the age of 16 cannot ride in the Luxury Dome or Luxury Parlor.
Tickets for the Grand Canyon Railway can be booked online and picked up a minimum of 20 minutes prior to the scheduled train departure. Those interested in booking a one-way ticket must call 1-800-THE-TRAIN (800-843-8724) to make a reservation.
Classes of Service
The Grand Canyon Railway has six classes of service: Pullman, Coach, First, Observation Dome, Luxury Dome, and Luxury Parlor.
In Pullman class, travelers step into an original 1923 Harriman-style coach car. The cars have bench seats and windows that can open up, letting in as much fresh air as you’d like (note: these cars are only available to ride in the spring and summer). Coach class is in a car from the 1950s and has bench-style seating, air conditioning, and large windows. First class offers oversized seats, and the entire ride is a bit more elevated with bar service and complimentary snacks. Coach and First are ADA-compliant.
A ticket for a seat in the Observation Dome grants passengers access to a glass-enclosed streamliner with panoramic views. Bar service, complimentary snacks, and padded high-back chairs add an extra dose of comfort during the ride. For even more comfort, you’ll want to book either the Luxury Dome or the Luxury Parlor. In the former, the full-length dome’s large windows are accented by private bar service, complimentary snacks, and exclusive cocktails. The latter is described as the “most exclusive seat on the train” and an “elegant rail baron experience.” Your ticket comes with open-air rear platform access, exclusive snack and drink service, and a sparkling white wine toast.
What to Expect on Board
The entertainment begins even before departure. Every morning, there’s a Wild West-style shoot-out at the Williams Depot between the Cataract Creek Gang and the Marshal (who also show up later in the afternoon as part of a staged train robbery). To set the mood while on board and bring passengers back in time, live musicians playing fiddles, guitars, banjos, and squeezeboxes make their way through the train cars while singing well-known Western tunes. Travelers who’d rather read during the ride can tear through the railway’s complimentary Territorial Times newspaper. As the train heads to the South Rim, note the changing scenery as the elevation decreases.
Food options on the train vary by service class and time of day. In First, the Observation Dome, and the Luxury classes, there’s complimentary fruit, pastries, tea, juice, and coffee in the morning; in the afternoon, cheese, vegetables, and soda tide over hungry passengers. Cocktails are also available for purchase in the aforementioned classes.
Points of Interest
There’s no shortage of interesting sights as you make your way from Williams to the South Rim and back again — starting at the Williams Depot. Here, visitors can spot an outdoor display of a Grand Canyon Railway steam locomotive and a caboose, as well as portions of the old Fray Marcos Hotel, which is one of the original Harvey Houses. As the train heads across the Kaibab Plateau, keep an eye out for the San Francisco Peaks (the remnant of a dormant volcano) and the abandoned Red Butte Airfield. One of the most exciting points of interest is the Grand Canyon Depot, deemed a National Historic Landmark and part of the Grand Canyon National Park Historic District. It’s also one of the few remaining log depots constructed in the US.
Holiday Train Rides
When winter arrives, travelers get the chance to hop aboard the Grand Canyon Railway’s Polar Express. The seasonal train departs Williams twice a day — at 5:30 and 7:30 p.m. — on select dates throughout November and December. Lasting just over an hour, the journey includes a stop at “the North Pole” to see Santa and his reindeer. Children are also gifted a keepsake present to enjoy alongside their hot chocolate and chocolate chip cookies during the ride. Polar Express tickets range from $59.99 to $97.99 for passengers 16 and over, while a child ticket costs anywhere between $43.99 and $67.99.
What to Know About Williams, Arizona
Thanks to the transportation provided by the Grand Canyon Railway, Williams is one of the gateways to the national park. It’s also home to a booming culture that highlights life in the Old West and Route 66 nostalgia. The 3,000-person town, which covers six square blocks, is known as the final stretch of Route 66 to be bypassed by Interstate 40. Route 66 enthusiasts can spend a full day admiring the historic buildings and popping in and out of memorabilia shops. Other Williams highlights include Pete’s Route 66 Gas Station Museum, the world’s largest ponderosa pine forest, and Bearizona Wildlife Park.
If you’re staying the night in Williams, the refurbished Grand Canyon Railway Hotel is right next door to the depot and can be booked with train tickets as part of a package.
Tip adapted from travelandleisure.comiii
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This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.
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i https://www.golfdigest.com/story/babe-didrikson-zaharias-olypmics-golf-swing-tips-golf-digest
ii https://www.foodnetwork.com/recipes/amanda-freitag/cucumber-pineapple-tequila-cooler-recipe-2112595
iii https://www.travelandleisure.com/guide-to-the-grand-canyon-railway-8682259
