While some argue that volatility could remain muted, others suggest it could increase again in 2024, citing an overheated market and credit market strains.
To help navigate market volatility looking ahead, investors can remember to keep a long-term view. Consider the hypothetical performance of an investor who stayed invested in the market versus missing out on its best days:
| Performance of $10,000 Invested in the S&P 500 Index 2003-2022 | Annual Return | |
| Fully Invested | $64,844 | +9.8% |
| Missing the 10 Best Days | $29,708 | +5.6% |
| Missing the 20 Best Days | $17,826 | +2.9% |
| Missing the 30 Best Days | $11,701 | +0.8% |
| Missing the 40 Best Days | $8,048 | -1.1% |
| Missing the 50 Best Days | $5,746 | -2.7% |
| Missing the 60 Best Days | $4,205 | -4.2% |
As the above table shows, by trying to time the market, investors may lose out on more than 50% of their return potential.
Not only that, the market’s best days often happen closely after the worst days. The good news is that since 1928, S&P 500 annual returns have been positive 74% of the time, reinforcing the value of sticking it out through market swings.
Reference: What Drove Market Volatility in 2023? (visualcapitalist.com)
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