Week 3 Day 5: Time Plus Consistency

The market goes up and down. Some years are terrible. Some years are amazing. But across decades, the trend is up. Your job is not to predict which years are which. Your job is to keep investing through all of them and let the math work.

Here are the S&P 500's annual returns for a sample stretch: 2008: -37%. 2009: +26%. 2010: +15%. 2011: +2%. 2012: +16%. 2013: +32%. If you panicked in 2008 and sold, you missed the recovery. If you stopped contributing, you missed buying shares at a discount. If you just kept your $300/month automatic investment going through all of it -- contributing the same amount regardless of headlines -- you bought cheap in 2008-2009 and rode the wave up through 2013. Consistency through chaos is the entire strategy. It is not exciting. It is not Instagram-worthy. But it works better than anything else available to regular people.

A JP Morgan analysis of the S&P 500 from 1999-2019 found that if you missed just the 10 best trading days over that 20-year period, your annualized return dropped from 6.06% to 2.44%. Missing the 20 best days dropped it to 0.08%. Missing the 30 best days made it negative. The problem: 7 of the 10 best days occurred within two weeks of the 10 worst days. You cannot capture the recoveries without enduring the crashes. This is the mathematical proof that consistency beats timing. Staying invested through everything -- especially the scary parts -- is the price of admission to long-term compounding.