Timing the Market: A Losing Proposition

Zacks
INVESTMENT
MANAGEMENT

In an examination of the historical returns of the S&P 500, the positive gains for an entire year are often obtained in a
just a matter of weeks. An investor attempting to time the market is playing a dangerous game. If one is just a few days
or weeks off in their timing, they can miss out on all of the return opportunity for the year.
Below we provide the returns for the S&P 500 (without dividends) for a sampling of years.
1991: 60% of the year's gains were made in the first fourteen
weeks. The other 40% was made in the last seven weeks.
18.2%

425

0%

0%

12.4%
450

7 Weeks

31 Weeks

14 Weeks

1992: The entire return was made in the last six weeks.

430

375

420

350

1996: One third of the return was made in the first six
weeks, with the remainder coming in the last fourteen
weeks.

92
11/2/1992

92
9/2/1992

92
7/2/1992

0%

33.4%

14 Weeks

15 Weeks

15.7%
1050

14 Weeks

32 Weeks

6
Weeks

1997: The entire years profit was made in a fifteen week

period.
0%
23 Weeks

11/2/1997

9/2/1997

7/2/1997
97

3/2/1997

1/2/1997

11/2/1996

650
9/2/1996

600

1998: All gains were made in an eleven week period.

0%

28.6%

41 Weeks

11 Weeks

1250
1150
1050
950

12/2/1998

11/2/1998

10/2/1998

9/2/1998

7/2/1998

6/2/1998

5/2/1998

4/2/1998

3/2/1998

2/2/1998

850

1/2/1998

7/2/19966

750

5/2/19966

650

3/2/19966

850

1/2/1996

700

5/2/1997
97

950

8/2/1998

750

0%

7.4%

92
5/2/1992

92
1/2/1992

11/2/1991

9/2/1991

7/2/1991

5/2/1991

390
3/2/1991

300
1/2/1991

400
92
3/2/1992

410

325

800

6
Weeks

46 Weeks

440

400

7.7%

XXX

Timing the Market: A Losing Proposition

Zacks
INVESTMENT
MANAGEMENT

1999: Half the year's profit was earned in the first

fourteen weeks, and the other half was earned in the
final eight weeks of the year.
1450

10.6%

0.1%

14 Weeks

30 Weeks

10.4%

2004: The entire profit was made in a seven week period.

1200

1400

0%

10.9%

45 Weeks

7 Weeks

1225

1175
1350

1150

8 Weeks

1300

1125
1100

1250

1075

1200

2005: The entire profit was made in eight weeks.

8 Weeks

11/2/2004
4

10/2/2004
4

9/2/2004
4

8/2/2004
4

7/2/2004
4

6/2/2004
4

5/2/2004
4

4/2/2004
4

12/2/2004
0%

18 Weeks
4

12/3/2006

11/3/2006

10/3/2006

9/3/2006

8/3/2006

7/3/2006
6

6/3/2006
6

3/3/2006
6

2/3/2006
6

Weeks

1/3/2006
6

12/3/2005

1200

11/3/2005
05

1050

10/3/2005
05

1250

9/3/2005
05

1100

8/3/2005
05

1300

7/3/2005
05

1150

6/3/2005
05

1350

5/3/2005
05

1200

4/3/2005
05

1250

3/3/2005
05

13.6%

30 Weeks
1400

2/3/2005
05

3/2/2004
4

0%
1450

5/3/2006
6

3%

44 Weeks

1/3/2005
05

2/2/2004
4

2006: All gains were made in an eighteen week period.

4/3/2006
6

0%
1300

1/2/2004
4

12/4/1999

11/4/1999

10/4/1999

9/4/1999

8/4/1999

7/4/1999

6/4/1999

5/4/1999

4/4/1999

3/4/1999

2/4/1999

1/4/1999

1050

DISCLOSURE: Source: Standard & Poors and Ibbotson Associates. The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poors
and owned by The McGraw-Hill Company. The returns portrayed do not show the reinvestment of dividends and
does not reflect advisory fees. An investor cannot invest directly in an index.