What about moving to cash?

Posted In: COVID-19 Market Update

A recent study by Putman Investments posed a similar question surrounding incidents of market turmoil over the last 15 years. As the chart shows, full stock market exposure from 2004-2019 would have yielded about 9% per year. But if you had missed just the 10 best days over that entire 15-year period, your returns would have been just 4.1%. That’s a dramatic change: less than half of the return by missing just 10 days! No one knows when the bottom of this decline will be, but we do know that eventually the market will bounce back. If you’re sitting in cash when things “bounce,” you may miss a lot of that rebound and unfortunately not be able to take advantage of the swift recovery that may come. Our recommendation is to stay well diversified and stay the course.

Source: https://www.putnam.com/literature/pdf/II508-d206c267bdc67daad04ae51e1e47a6d4.pdf

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