Shocking Facts That Explain Why Most People Lose To The Market

Posted On November 7, 2016 10:20 pm

A University of Michigan Study found that between 1969 and 1993 the market’s top 90 trading days accounted for 95% of the gains in stocks over this time. In other words, if you had missed out on just 1% of the market’s best days, your performance over this 34 year period would be 20 X worse than if you had just bought and held a low cost S&P 500 index.

More shocking is another study that found that if you had missed just the top 7% of monthly market returns between 1926 and 1990, your total returns would come to ZERO over 64 years.

What can we learn from these studies? That buy and hold investing doesn’t work? NO! It’s actually the opposite. Market timing is what doesn’t work. Trying to call a market top, and buy at the bottom sounds like a great way to maximize returns but overwhelmingly such attempts prove fruitless for almost everyone, even the best trained, and funded Wall Street professionals.

And since the average investor hasn’t the time, and or the proper mentality to jump in and out of the markets based on predetermined rules that completely ignore emotions, and trades with iron discipline, the simple fact is that buy, hold, and accumulate quality companies on dips (and reinvest the dividends) remains your best bet for achieving your long-term financial dreams.

I daresay that for the vast majority of people, it represents the best, and perhaps only realistically become independently wealthy within their lifetime.

About author

Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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