When it comes to investing in the financial markets, panic selling often leads to missed opportunities – and waiting for the dip could rob you of the most lucrative days to hold a particular asset. Those are the general takeaways of a comprehensive study of the S&P 500 Index conducted by Bank of America.
Using data going back to 1930, Bank of America strategists found that a basic hold strategy would have yielded total returns of 17,715%. If, on the other hand, investors tried to time the market, they could have missed out on the best trading days. Missing just ten of the S&P 500’s best trading days each decade would have diluted the total returns to just 28%.
For many investors, especially inexperienced ones, the natural impulse is to sell following a major downturn. But Bank of America found that the market’s best days often follow from the worst drops. Panic selling on the way down could lead to investors missing the best days.
Trying to time the market has been a futile affair. Chart via CNBC
Savita Subramanian, the bank’s head of U.S. equity andTitle: Bank of America report extols the virtues of HODLing
Sourced From: cointelegraph.com/news/bank-of-america-report-extols-the-virtues-of-hodling
Published Date: Thu, 25 Mar 2021 19:07:43 +0000