Blue Haven

Chart of the month: The case for starting early & holding

By October 16, 2021 No Comments

Have you ever heard the phrase: time in the market is more important than time in the market? It’s borne out of the fact that many people try to time the market, with bad results. The number one distinction of positive returns isn’t when you buy, rather, it’s how long you hold on for. This point comes across very well in our chart of the month which shows the odds of making money in the S&P 500 over different holding periods since 1950.

This chart is very compelling in that, historically, we see the odds of making money in the market are higher the longer we stay invested. Seven year holding periods have been profitable more than 90% of the time! And any 14 year holding period since 1950 has been profitable 100% of the time!

That’s pretty remarkable considering all that has happened over the last 70 years: Vietnam, 1970’s oil crisis, runaway inflation in the 1980s, the crash of 1987, the dot com bubble, the Great Financial Crisis, etc. Ultimately, none of those have gotten in the way of the long-term investor’s goal.

We also shouldn’t lose sight of how high the odds are for even just two year holding periods; 82% is pretty high, that’s 8/10. If I told you you have an 8 out of 10 of making money over the next two years, would you take those odds?

Remember, when it comes to investing, the key is to avoid the day to day headlines and stay focused on the long-term trend. While there have been bumps in the road, the market has been a rewarding place for investors to be.

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