Every market crash produces the same advice. Analysts urge caution. Cable news explains the structural reasons the decline could continue. And statistically, a portion of retail investors sell. The problem is not the selling — it is what happens next.
The 10-Day Study
Research on the S&P 500 over 20-year rolling periods consistently shows the same finding: the majority of the market's long-run returns are concentrated in a very small number of trading days. Missing those days does not slightly reduce returns. It devastates them.
$10,000 invested in S&P 500 — 20-year period
| Scenario | Result | vs Fully Invested |
|---|---|---|
| Fully invested throughout | $64,800 | — |
| Missed 10 best days | $29,600 | −54% |
| Missed 20 best days | $17,400 | −73% |
| Missed 30 best days | $10,800 | −83% |
Missing 10 days out of 5,000 — 0.2% of trading days — cuts the portfolio in half. Missing 30 days out of 5,000 leaves you with less than the original investment.
When the Best Days Happen
The best trading days do not happen in bull markets when the news is good and investors are feeling confident. They cluster immediately following the worst periods. In 2009, the single best trading day was March 23 — three days after what turned out to be the bottom of the financial crisis. In 2020, the best trading days were in late March and early April, right in the middle of the COVID crash.
An investor who follows the rational-sounding logic of "I will get back in when things stabilize" is almost certain to miss these days. By the time things stabilize, the recovery is already priced in.
The Behavioral Gap
DALBAR, a financial research firm, has measured the behavior of actual mutual fund investors relative to the underlying funds for decades. The consistent finding: individual investors underperform the funds they invest in, because they buy high (after good performance makes the news) and sell low (after bad performance makes the news).
The average equity fund investor has historically earned 1 to 3 percentage points per year less than the funds they hold. On a 30-year investment horizon, that gap produces a dramatically different retirement outcome — often hundreds of thousands of dollars.
It is not that individual investors are irrational. The behavior is completely understandable. Watching a portfolio lose 20% of its value in 30 days feels like information about the future. It is mostly noise. The signal — the long-run real return of productive capital — is drowned out by it.
What Works Instead
Dollar-cost averaging — investing a fixed amount on a regular schedule regardless of market conditions — removes the timing decision entirely. You buy more shares when prices are low and fewer when prices are high, producing a lower average cost per share over time.
Index fund investing removes the selection decision. You capture the full distribution of returns, including the days that matter most. The combination — regular investments in broad index funds, left alone — has outperformed active stock-picking and market-timing strategies of professional fund managers in the majority of measured time periods. Not because individual investors are smarter. Because they are not trying to be clever.
The calculator below shows the precise cost of missing various numbers of the market's best days, applied to your specific investment amount and time horizon.