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DIY Investor

The cost of being out

simulator

What does missing the best years cost?

Shows the concentration of returns — and, unusually, the symmetric case of dodging the worst years, so you can judge the argument honestly.

The period

1994
2025
100%
10 years

For the holding-period chart below.

32 years, 1994–2025

What being out of the market at the wrong moments cost — and what being out at the right moments would have gained.

Stayed invested
$260,082

10.7% a year

Missed the 10 best years
$23,863

2.8% a year

Dodged the 10 worst years
$925,264

15.2% a year

Every scenario, side by side

Including the ones usually left out of this argument.

  • Stayed invested throughout
    $260k
  • Missed the 1 best year
    $193k
  • Missed the 3 best years
    $114k
  • Missed the 5 best years
    $71k
  • Missed the 10 best years
    $24k
  • Dodged the 3 worst years
    $680k
  • Dodged the 10 worst years
    $925k
  • Missed the 10 best AND dodged the 10 worst
    $85k
Missed years are assumed to sit in cash at 2%.

Read both halves of this chart

The “missed the best days” statistic is real, and it is usually presented dishonestly — the symmetric case is left out. Avoiding the worst years would have been enormously valuable. Presenting only the downside makes timing look impossible; showing both makes clear that it would be extraordinarily lucrative if anyone could do it reliably.

Annualised return over every 10-year window

89 overlapping periods since 1928.

0%+5%+10%+15%+20%194019601980200010-year annualised return
Drag the window slider in the panel — the range of outcomes narrows sharply as the holding period lengthens.
Best window
20.1%
Median
11.0%
Worst window
-1.7%
Windows that lost money
6%

Why this matters

The real case against market timing is not that returns are concentrated. It is structural: exiting and re-entering are two separate correct calls, and the second is the one almost nobody makes.

The best and worst periods cluster together, inside the same volatile stretches. The largest single-day gains in market history sit within weeks of the largest falls. So anyone who successfully sells before a crash is holding cash exactly when the sharpest rebounds arrive, and must then decide to buy back into a market that still feels terrible — with no signal telling them when.

Sharpe estimated a timer needs to be right roughly three quarters of the time simply to break even against buy-and-hold once costs and missed upside are counted. There is no evidence that individual investors, or the funds marketing the capability, clear that bar.

One thing this is not an argument against: holding cash for a known near-term expense. That is matching an asset to a liability, which is exactly what you should do.