March 18, 2020 - Market Timing Update

March 18, 2020
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Market Timing Update

With the recent volatility in the equity, bond, and commodity markets, we wanted to take a moment to remind everyone of the importance of staying invested and not panicking in response to headline events.

The following chart from Charles Schwab & Co. helps to drive this point home. Over the long-term, portfolio gains can be attributable to a handful of days. For example, investing $1,000 in the S&P 500 from 1950 to 2019 without any trades would have resulted in annualized performance of +7.8% and an ending account value of $192,423; however, missing the top ten trading days over that same time would have dropped annual performance to +6.7% and the ending account value to only $92,852. Please note that this illustration does not assume reinvestment of dividends or the effect of taxes or fees and is purely for illustrative purposes. Additional disclosures from Charles Schwab are presented directly below the chart.

As long-term investors, we employ a disciplined, long-term approach and are not market timers. This chart is a good illustration of how moving to the sidelines in response to events can be detrimental to long-term returns. We continue to look for opportunistic ways to deploy cash and remain committed to our investment philosophy.

If you have any questions or concerns, don’t hesitate to reach out to us.