Minuk's Musings and The Best Days

Stock markets were volatile again this week (although a very nice bounce today), and that’s no surprise given the uncertainty due in large part to the ongoing tariffs and trade war.

 

When headlines are noisy, our natural human instinct is to step to the sidelines to avoid what we perceive as risk.

 

However, history shows that the real risk we should be thinking about is the risk of missing out on just a small handful of the market’s best trading days.

 

The chart below illustrates this point:

 

From Jan 1, 2000 to Dec 31, 2024, despite multiple tumultuous periods, an untouched $100k investment in the Canadian stock market would have grown to $568,000.

 

Missing only the best 5 trading days during this 25-year period would have decreased the total return of the investment by a whopping 35%, down to $366,000.

 

Missing the best 10 trading days during this 25-year period would have resulted in a roughly 50% haircut on the total return of the investment.

 

That is a big difference for just 10 days over 2 and a half decades.

 

Value of $100,000 Invested January 1, 2020 After 25 Years

 

 

And here’s the kicker –the best trading days almost always occur during periods of volatility, when people are most tempted to sell. Since nobody can predict when they will come, the only way to capture them is to stay invested.

 

If you have any questions about your portfolio during this current period of uncertainty, please don’t hesitate to reach out and I would be happy to walk through your investments line by line together.

 

Have a nice weekend,

 

Rich

Investment Advisor