Practical analysis for investment professionals
07 July 2016

Missing the Best Weeks: A Mistake Investors Should Fear

Missing the Best Weeks: A Mistake Investors Should Fear

In early February 2016, the S&P 500 fell as much as 15.2% from its all-time high of 2134.72, reached in August 2015. The pessimism was tangible. Fear permeated the investing landscape. And once again, despite “feeling different” this time, stocks quickly erased most of their losses in just a few short weeks. It took no time at all for the fear of further declines to morph into the fear of missing out.

I am going to make the case that investors are actually rational when they fear missing out. In fact, they should absolutely be afraid to miss the best gains.

In the 2,400-plus weeks since 1970, missing the best weeks would have had a devastating impact on returns (I am using only the price of the S&P 500). Missing just the best one week took a 13% bite out of the total return from this 46-year period. Missing the best five weeks out of 2,411 (0.2% of all weeks) took the returns from 2151% down to 1223% — a 43% decline!

Missing the Best Weeks


If you missed the 10 best weeks — just 0.41% of the total number of weeks — you might just as well have invested in risk-free Treasury bills.

Missing the Best Weeks of the S&P 500: A Comparison (1970–February 2016)

Returns after Missing the S&P 500's Best Weeks (1970–Feb. 2016)

While it’s virtually impossible to miss all of the best weeks, it is entirely possible to miss a lot of them. I am simply showing the extremes in order to make the point that sitting out strong weeks severely damages long-term returns. And while even the worst investor couldn’t miss all of the best weeks, it is likely that below-average investors do, in fact, miss a lot of strong weeks.

Here’s why: The best weeks tend to occur in lousy markets, after the undisciplined investor has already bailed, opting for short-term relief in lieu of long-term gains.

Below are the 20 best weeks since 1970, represented by the blue diamonds:

The S&P 500’s 20 Best Weeks

S&P 500 Best Weeks Chart

The majority of the best weeks occur underneath the 40-week moving average (80% and 60% of the best 10 and 20 weeks). This line, which is roughly equivalent to the 200-day moving average, smooths out market gyrations to give a clear picture of what type of market environment you are in. Take the best week, for example, which occurred in October 1974. This happened during one of the worst bear markets our stock market has ever seen, as the collapsing yellow line clearly demonstrates.

Investors should fear missing out on the best gains more than suffering the worst losses. If you never attempt to avoid the worst weeks, you’ll never have to worry about missing the best weeks.

At the 69th CFA Institute Annual Conference, Michael Batnick, CFA, discussed social media’s influence on the financial services sector and what professionals need to do to adapt.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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About the Author(s)
Michael Batnick, CFA

As Director of Research at Ritholtz Wealth Management, Michael Batnick, CFA, reads research publications and is in charge of the company’s internal research efforts. Batnick is a member of the investment committee, and spends most of his time developing and implementing risk management and portfolio strategies for the firm’s clients. Batnick writes at The Irrelevant Investor blog, where he aims to educate people about investing.

9 thoughts on “Missing the Best Weeks: A Mistake Investors Should Fear”

  1. Doug says:

    This exercise would be more interesting if you were to look at the flip side – missing the worst weeks. The outperformance is similarly impressive. Actually, since bear markets tend to be sharper and the worst weeks tend to be truly truly bad, missing those more than compensates for missing the best weeks.

  2. Doug says:

    This also suggests that you should really restrict your investment times to moments when conditions are very very favorable. Doesn’t it say that “time in the market” is really not the driver of returns? If 0.41% of time can have such a massive impact then there must be lots of times where you could simply sit in cash and not miss much of the return.

    You need a few hallmarks to have a sense of which is which, but is it really so difficult? For instance, bad weeks tend to cluster together much more so than good weeks. Avoiding bad weeks might not be so difficult. Probably some simple macro calls based on credit conditions. This data suggests you don’t have to time it too carefully, since a few trading days carry so much impact, once it is clear that credit is being offered on silly terms. Sit out the game until the chickens come home to roost.

    1. Marc says:

      You seem to have the key word, Could.
      We see a lot of they moves come from the Housing Bubble Crash.
      S&P’s worst week in the period down -18.2% the week of 10/6/08 after its fifth worst week down -9.4% the week of 9/29/08. There were signs but you might have been out for longer than just two week. When would you have gotten back in for the 10/27/08 10.5%, 11/24/08 12%, 12/29/08 6.8%, 3/9/09 10.7%, 3/23/09 6.2%? It seems the the up weeks were clumping just as much as the down weeks.
      I don’t remember a single bear trader/promoter who flip 180 in mid-october 2008 to become a raging bull but that was the time to do it. Other than P/E, momentum factors, & other price or market driven metrics, no new info or data ever arrives quickly enough to change forecasts from week to week. Sales data, market trends, GDP, employment, trade etc. are all derived from data collection that can be weeks & months old & are frequently revises over then next months.
      The base state of the stock market is everything is neutral its that it will grow. It grows because we have still have population growth (in the US & the world) & we still are getting productivity increases which expands the economy. To get a gain from jumping in & out your down accuracy must be very good because even missing a neutral week will be a cost. For most, they miss some good weeks & plenty of neutral ones to avoid the worst ones & then wait longer & miss plenty of the rebound hot week. The ones who can actually do it is a tiny percent of those who think they can.
      How would you have avoided the third worst week? 9/10/01 down 11.05%? I did. I had a mix up in a reallocation. I sold on 9/10 & could not buy the new securities until the markets finally re-opend. I can’t call blind luck as skill but many do.

  3. Mark Lim says:

    How about doing the analysis of missing BOTH the best and worst weeks?
    That would be a better analysis than just missing out the worst weeks as the result is always negative and thus the basis to being always invested.

  4. Kit North says:

    With the recent volatility it has been quite tempting to try and time the market. Therefore, I love finding articles such as these to bring me back to reality. I find a great company with a few durable competitive advantages, invest in them, and hold on for dear life! Thanks for the excellent article, Michael.

  5. William D. Lee, CFA says:

    As a strategic asset allocator, I don’t believe in timing markets, and agree with the conclusion of the analysis. However, the manner in which we get to the conclusion seems flawed. Of course if you miss only positive weeks you are going to hinder performance. The likelihood of timing being that perfect to only get out and then back in exactly when positive weeks occurred seems implausible at best. I have seen a couple of marketing pieces which give the opposite analysis suggesting if you can miss the worst days you are better off the classic “win by not losing” mentality.

    The real question one needs to ask themselves is “do they believe they can miss more bad days than good?” If so then the math will be positively in their favor, if not it will be a hindrance to long term performance.

  6. James says:

    Many of those “best weeks” dates are null as succeeding stretches of performance ( over X periods ) in each case cancelled out the upside value added to the forward total return. June 74, Sept 74, Oct 74, Nov 80, May 00, Sept 01, Oct 08, Nov 08, Dec 08.
    It is the tactical method that can avoid the largest down weeks / months in comparison to the up weeks / months that can really add risk mitigated alpha to the underlying total return.

  7. Bertrand says:

    I agree with most of the above comments, missing the worst days would generate a far higher out-performance. This should have been included in this article as it is misleading in its current form.

    We all know that timing the market is as hard as stock picking. If you do well then you got lucky and this won’t last forever. The dollar cost averaging is usually the best solution here. If you can accumulate cash or lower your exposures in order to invest in every significant dips, then you will outperform over the long term.

  8. Victor Zeng says:

    missing the best weeks will deeply dampen your performance, it basically expains nothing

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