Investors: This Is the Most Expensive Risk You Might Be Taking Without Even Realizing It
Key PointsTime in the market -- not timing the market -- is an investor's best friend.
Investors are often aware of the risks associated with long-term investing. To mitigate these risks, they often maintain a diversified portfolio comprising well-managed and well-capitalized companies with long-term growth potential. This strategy helps them navigate through periods of short-term market volatility. However, attempting to time the market by buying low and selling high can introduce a different form of risk.
This approach involves predictions about market movements, which are inherently uncertain. Consequently, investors may fail to purchase stocks at their lowest prices or sell them at their peak, thereby missing out on potential gains. According to an analysis by Fidelity Investments, skipping the top five days of stock market performance from 1987 to 2025 could diminish a hypothetical investment portfolio by 38%.
Ignoring the 10 best days would decrease the portfolio value by 55%, and overlooking the 30 best days would result in a 84% reduction in its worth.
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