I written many times before on the importance of staying invested. Recently I wrote about the impact on returns for the DAX Index based on a study by Sutor Bank of Germany. The study also included effect on returns for missing out the best days on other country indices. For the S&P 500, if an investor missed the 17 best days in the 31 year period from 1988 to 2018 then the return was cut in half. For the FTSE 100 just missing the 5 days was enough to halve the return.
Country comparison: In the UK, 5 missed days are enough to cut returns in half
The cross-border analysis of Sutor Bank has shown that it looks very similar with other stock exchanges in the world. The evaluation is on a euro basis; in local currency the results are similar. For the Swiss SMI, it was enough to have missed the best 17 days between 1988 and 2018 to halve its return. With the American S&P 500 it is also 17 days, with the MSCI World 12 days – with the Hang Seng index only 9 days, with the French CAC40 only 6 days, and with the British FTSE 100 even only the 5 best missed trading days, by half Forfeiting returns. Even more serious: With the FTSE 100, for example, you only had to have missed the best 14 trading days over a 31-year period to even generate a negative annual return. At the Swiss SMI, it took 47 days.
Table: Number of best missed trading days and effects on returns – by country indices (period: 31 years; 1988-2018; in euros)All data refer to euros; Currency effects have an impact on returns; no data for Japan / Nikkei, as the market here was negative overall; Observation period: 1.1.1988-31.12.2018
The key takeaway is investors should never try to time the market. Time in the market is more important than timing the market. Otherwise just missing a handful of days – 17 days to be exact in a long 31 year period is enough to lose half the returns (S&P 500).
The contribution limits for 2021 for the various retirement plans has been released by the Internal Revenue Service(IRS). The contribution limits for Traditional IRA and Roth IRA stands at $6,000 per person (provided one is qualified to contribute). The catchup contribution limit for those aged 50 or higher is $1,000. For college savings, the Coverdell ESA contribution limit also stays at $2,000.
Every year the folks at Lord Abbett publish a simple and easy to use cheat sheet listing all the retirement plans and the latest contribution limits. This list is very useful for investors. The following table shows the contribution limits for 2021. As we head towards the end of this year, its wise to plan ahead for 2021.
Have you ever wondered what are winter (or) ice roads? Ice roads became popular a few years ago with the broadcast of the television series called Ice Road Truckers. The following infographic shows some of the fascinating facts about ice roads:
I have written a few articles earlier on pandemics and equity markets which can be found here and here and here. The following chart shows the major health epidemics and the performance of the MSCI World Index since 1970. The index has powered through global health epidemics such as Dengue, Zika Virus, SARS, Swine Flu, etc.
Tourism is a major industry in many countries. The below chart from OECD shows tourism as a percentage of GDP for select countries. Tourism accounts for 12.5% and 11.8% of the GDP for Portugal and Spain respectively. Other economies with high high dependence on this industry include France, Mexico and Greece. Tourism is 2.8% of the US economy.
