This post was authored by Salvatore M. Capizzi, Dunham's Chief Sales & Marketing Officer. If you have questions concerning today's topic, please call us at (858) 964 - 0500. Hold us to higher standards.

A wise man once said, “the best way not to be hit by a train is not to be on the tracks.” While that may appear to be sage advice to avoid a major confrontation with a locomotive, this wisdom may fall short as an analogy for the stock market.

Some investors try to time the market in an attempt to avoid the oncoming train of a declining market. The strategy is simple; be in stocks when they are advancing and be out of the market when losing value.

What we consider one of the biggest challenges with this strategy is that you have to be right twice. Not only does your timing need to be right when coming out of the market, but your timing also has to be right as to when you get back into the market.

Bank of America Study

According to a study by Bank of America, coming out of your investments too soon or getting back into the stock market too late and possibly missing the best days of the market could potentially hurt your investment returns.

Bank of America analyzed the S&P 500 going back to 1930 and through December 31, 2020. They determined that if an investor trying to time the market missed the S&P 500’s ten best days each decade, their total return would be 28%.(1)

However, if, instead, the investor did not sell out of their investments when the market declined, maintaining what we call staying Calm and Steady, their return would have been 17,715% despite the ups and downs the market experienced each decade.

Source: Bank of America, S&P 500 returns, December 2020

J.P. Morgan Study

J.P. Morgan Asset Management also studied the impact that trying to time the market may have on an investor’s portfolio, and in our view, their findings are astonishing.

In their February 18, 2022 report, J.P. Morgan Asset Management Company released its findings on the effects of missing the market’s best days. Their study covered 20 years, examining the S&P 500 ending January 31, 2022. (2)

To balance our discussion, if an investor could flee the market and miss the worse day and enter the market on the best day, they can certainly enhance their return.

However, this may be difficult, according to the J.P. Morgan findings.

They found that from January 31, 2002 – January 22, 2022: (2)

• Seven of the ten best days of the markets happened within 15 days of the ten worst days for equities.

They go on to say in their study, “So next time market volatility feels scary enough to make you second guess your long-term investment strategy, have a good think before you get out of the market. There could be a 70% chance you’ll miss one of the best days.”

The chart below illustrates what’s happened when an investor missed the 10 single best days in markets over the past 20 years. If missing the 10 best days sounds implausible to you, consider that in the past 20 years, seven of those best days happened within just about two weeks of the 10 worst days. (2)

They measured $10,000 invested and what they found was that over those 20 years, the S&P 500 returned an annual compounded rate of return of 9.4%. That means a hypothetical $10,000 in an investment that could generate the returns of the S&P 500 would have been worth $60,253 by January 2022.

Missing these days can potentially cost you return.

Days Missed

Total Return

Value of $10,000 Invested (2)










Source: JP Morgan, January 2022

We need to remember that no two markets are the same and past performance never indicates future results.

Staying Calm and Steady when the market declines is not easy as the media bombards us with stress and fear. However, the research illustrated above may suggest that Common Sense would dictate not to panic out of the markets when they sharply decline. It may advocate staying with your investments and not missing what might become some of the best days of the market.


(1) CNBC March 24, 2021

(2) J.P. Morgan Asset Management Company February 2022 wealth-partners/insights/the-case-for-always-staying-invested Prepared by J.P. Morgan Asset Management using data from the Morningstar Direct annualized returns based on the S&P 500 Total Return Index. This chart is for illustrative purposes only and does not represent the performance of any investment or group of investments.


The information in this document contains general market information only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. Nor should it be relied upon in any way as a forecast or guarantee of future events regarding a particular investment or the markets in general. This newsletter is for informational purposes only and does not constitute a solicitation or an offer to sell securities or advisory services nor is it an offer to purchase an interest in any Dunham Fund or Program.

Investments are subject to risks, including possible loss of principal. Investors should consider the investment objectives, risk factors and expenses of any investment carefully before investing. Diversification does not guarantee profit or ensure against loss.

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Past results are not indicative of future performance and are no guarantee that losses will not occur in the future.  Future returns are not guaranteed and a loss of principal may occur.

The S&P 500, or the Standard & Poor’s 500, is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. The S&P 500 Index components and their weightings are determined by S&P Dow Jones Indices. It differs from other U.S. stock market indices, such as the Dow Jones Industrial Average or the Nasdaq Composite index, because of its diverse constituency and weighting methodology. It is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy.

You can not invest directly in an index.

Dunham & Associates Investment Counsel, Inc. is a registered investment adviser and broker/dealer. Member FINRA/SIPC