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The Cost of Trying to Time the Market

Ginnie Baker
June 20, 2022

The impact of being out of the market for a short time can be profound, as shown by this hypothetical investment in the stocks that make up the Russell 3000 Index, a broad US stock market benchmark. Staying invested and focused on the long term helps to ensure that you’re in position to capture what the market has to offer.

A hypothetical $1,000 investment made in 1997 turns into $10,367 for the 25-year period ending December 31, 2021.
Over that 25-year period, miss the Russell 3000’s best week, which ended November 28, 2008, and the value shrinks to $8,652. Miss the best three months, which ended June 22, 2020, and the total return falls to $7,308.
There’s no proven way to time the market—targeting the best days or moving to the sidelines to avoid the worst—so the evidence suggests staying put through good times and bad.

In US dollars. For illustrative purposes. Best performance dates represent end of period (Nov. 28, 2008, for best week; April 22,
2020, for best month; June 22, 2020, for best 3 months; and Sept. 4, 2009, for best 6 months). The missed best consecutive
days examples assume that the hypothetical portfolio fully divested its holdings at the end of the day before the missed best
consecutive days, held cash for the missed best consecutive days, and reinvested the entire portfolio in the Russell 3000 Index
at the end of the missed best consecutive days. Frank Russell Company is the source and owner of the trademarks, service marks,
and copyrights related to the Russell Indexes.

Required Disclosures: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Short-term performance results should be considered in connection with longer-term performance results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. This information is for educational purposes only and should not be considered investment advice or an offer of any security for sale. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Beaird Harris Wealth Management, LLC -“Beaird Harris”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Beaird Harris.

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