STREET DOGS: The high cost of indecision
When you ask yourself should I buy now or wait for better days?
Something worth remembering when you ask yourself should I buy now or wait for better days? In 2012, Matt Koppenheffer warned in the Motley Fool that keeping $100,000 out of the market could end up costing you almost $200 a day. How did he come up with that? Koppenheffer downloaded 20 years of S&P 500 data into an Excel spreadsheet and looked at what would have happened had he been out of the market for a random 200 days, or an average of 10 days a year, from 1991 to the end of 2011. "I ran the simulation 50 times," he says, "each time generating a different 200 days when I was not invested in the S&P." The result: mean and median reductions of $23,301 and $39,331 respectively over the 20-year period. Dividing the latter by 200 shows that if you were out of the market for just 200 trading days it would have cost you $197 each day. "I used the S&P 500, but I am certain that you’d get pretty much the same result [for other markets]," Koppenheffer claimed. "The reason is painfully obvi...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.