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These statistics are supposed to support the random walk theory. But they do not. Prices are not random, they move in trends.
If I want to experience the sun in Mallorca, I go there in summer, not winter. That doesn't guarantee sunshine, but the probability is on my side.
Similarly, the price differences are not evenly distributed over time. The majority of the 41 best days are above SMA200, for example. So you don't have to hold blindly. And you probably shouldn't either. After all, who knows what Tesla will be in 14 years' time?
If I want to experience the sun in Mallorca, I go there in summer, not winter. That doesn't guarantee sunshine, but the probability is on my side.
Similarly, the price differences are not evenly distributed over time. The majority of the 41 best days are above SMA200, for example. So you don't have to hold blindly. And you probably shouldn't either. After all, who knows what Tesla will be in 14 years' time?
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@Epi I'm with you: you shouldn't hold a stock "blindly" according to the motto "pray and hope". Nevertheless, I find it interesting that, for example, the best trading days often immediately follow the worst trading days, which may be below the SMA 200. As you say, it would be interesting to see how the best days are actually distributed.
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@thewolfofallstreetz The statistics are mostly for the S&P500. It is true that the best days often follow the worst. However, these extremes average out and the clear majority of positive days are above the SMA200.
There are also mirror studies to the one in the article: if you miss the 40 worst days, the return increases by a factor of 5 or so. The conclusion from this is the opposite of the article. And then?
There are also mirror studies to the one in the article: if you miss the 40 worst days, the return increases by a factor of 5 or so. The conclusion from this is the opposite of the article. And then?
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@Epi The following quote comes to mind:
"About 42% of the S&P 500's strongest days have occurred in a bear market over the past 20 years. Another 34% of the best market days occurred in the first two months of a bull market - before it was even clear that a bull market had begun."
Source: Ned Davis Research, quoted by Hartford Funds
Or, to use your words, when I leave the island sometime in the fall, I don't care much about the top temperature rises in January, even if they are the top days from -20 to -2 degrees.
As we all know, -50% in the portfolio also needs +100% to get back to zero.
I think statistics are ok, but what bothers me about them is that they show the performance of the top x days separately from the flop x days.
"About 42% of the S&P 500's strongest days have occurred in a bear market over the past 20 years. Another 34% of the best market days occurred in the first two months of a bull market - before it was even clear that a bull market had begun."
Source: Ned Davis Research, quoted by Hartford Funds
Or, to use your words, when I leave the island sometime in the fall, I don't care much about the top temperature rises in January, even if they are the top days from -20 to -2 degrees.
As we all know, -50% in the portfolio also needs +100% to get back to zero.
I think statistics are ok, but what bothers me about them is that they show the performance of the top x days separately from the flop x days.
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