Stay in the Game

Tom Contrucci

08 March 2022

“It’s difficult to make predictions, especially about the future.” - Mark Twain

The start of 2022 has been difficult in the financial markets to say the least. Asset returns have been challenging so far with equity and fixed income asset classes in negative territory year to date. Headlines across the board are a seemingly endless stream of bad news from inflation, anticipated interest rate hikes, and geopolitical uncertainty.

So, what is an investor to do in difficult times like we are experiencing now? The answer…stay invested in strategies that compound gains over time and don’t risk missing the market's best days.

A recent study of the S&P 500* highlights the impact on returns for a $10,000 investment that missed the 5, 10, 30 and 50 best days since 1980 (over 10,000 trading days).

    • Staying invested all days resulted in a gain of $697,421
    • Missing the 5 best days resulted in a gain of $432,411, equating to missed growth of $265,010 or 38% less
    • Missing the 10 best days resulted in a gain of $313,377, equating to missed growth of $384,044 or 55% less
    • The results for missing the best 30 and 50 days are even worse with 83% and 93% less growth

Time in the market is much more important than timing the market. Long term investors appreciate this and embrace the concept of compounding over time. At Overlay Shares we actively work with advisors and investors to deliver strategies that enable long term compounding from a conservative investment approach. Our equity and fixed income ETF strategies have the potential to add an additional 2.0% of tax efficient income on top of their respective underlying assets.

The Power of Compounding: An Additional 2.0%**

 **Assumes a 2.0% net annualized Overlay return

Allocating to strategies that actively incorporate the benefits of compounding can help keep investors on track to achieve their desired outcomes, particularly during times of market stress.  

*Source for S&P 500 Study, Fidelity Investments Research


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The assertions and statements in this blog post are based on the opinions of the author and Liquid Strategies. The examples cited in this paper are based on hypothetical situations and should only be considered as examples of potential trading strategies. They do not take into consideration the impact that certain economic or market factors have on the decision making process. Past performance is no indication of future results. Inherent in any investment is the potential for loss. 

Tom Contrucci

Tom joined Liquid Strategies in 2019 as a Partner and has over 23 years of investment industry experience. Tom is focused on development, growth, and communication for the firm’s suite of investment strategies with strategic account relationships.