The Good, the Bad, and the Beautiful

Curiosity and a fellow research guru prompted us to look back historically at a $1 investment in the S&P 500 under three different strategies.  Beginning in January of 1966 we tracked the performance of the smartest strategy: removed the five worst days in the S&P each year, and the least smart (avoiding insult): removed the five best days each year.  Each was calculated assuming the investor was to buy $1 worth of S&P shares, sell them before the day of the big move (+/-) and then buy back new shares the next day.  They are both compared below to a simple buy and hold strategy below. 

Comments

[Chad]

Now if you can just tell us when the bad days are more likely to occur... and when the good days are...

[M Rubesch]

So, the Perfect-Timer gets 151x the return of the Buy-n-Holder, a factor worth pointing out, as the number is aptly reminiscent of high-octane rum. But seriously, this is an excellent chart and a powerful message. Thank you!