Stock Market Extremes and Portfolio Performance

John Kuran points us to a study on Stock Market Extremes and Portfolio Performance.

click for larger graphic

Bestworst_chart

Graphic courtesy Towneley Market Timing Study

While one frequently hears T-Heads mentioning how performance drops if/when investors miss the best periods in the market, one rarely hears mention of missing the worst. I recall Tom Dorsey (of DWA) discussing this some years ago.

Note that same market index performance of 12% per year (discussed prior via Jeremy Siegel) requires a very long duration to assure that level of performance.

Source:
Stock Market Extremes and Portfolio Performance
Professor H. Nejat Seyhun, University of  Michigan
(commissioned by Towneley Capital Management)
http://www.towneley.com/html/study.htm

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