You Are Being Lied To

This statement may be a bit harsh but you certainly are not being told the complete truth.

Fidelity, the largest fund manager in the world, produced the report Time in the market, not timing the market.  They provided the chart below, showing the impact of an investor in global stocks missing out on the returns of the market’s best 10 days over a 10 year period which would have resulted in a loss.

Missing best days


Fidelity also produced a website for showing how a notional $10,000 investment would have been affected if the best days were missed.  For example, if the 10 best days were missed on the ASX, the final return will be more than $10,000 less than if you were fully invested all the time. What they don’t tell you is that 9 of the 10 best days were between 1st November 2007 and 6th March 2009, a period of time that if you remained fully invested, as typically advised by fund managers, you would have lost more than half the value of your investment.  The US S&P500 shows very similar outcomes.

Fund managers, such as Fidelity, don’t mention this in their reports. Is it because they didn’t know or they did know and decided to misrepresent reality?  Either way, investors are coerced into investing their funds in a (Fidelity) managed fund.

Research shows the same occurred in October 1987. The three best days over a ten year period occurred during that month which happened to fall 20.47%!

It is said that it is impossible to time the market. To a certain extent that is right, no one rings a bell at the top or the bottom of the market. However, it is possible to avoid large downturns in the market, preserving your capital ready to reinvest again when signs that the market is again starting to rise in value.

Contrary to the advice given by the managed funds, it is more important to avoid the biggest down days rather than be invested during the biggest up days.