Do you think you can beat the market? Really?
Let’s pick a random 10-year history of the S&P 500 and see if you can spot and avoid the downturn, as the chart progresses through time below.
You’ll start with $10,000 invested. Hit “Sell!” when you think that you should take your money out of the market. Hit “Buy!” when you want to get back in. Quartz economics reporter Matt Phillips will taunt bark reminders your way. Be careful, in this game you can only buy and sell once.
Since 1978, there have only been 126 weeks where a portfolio matching the S&P 500 closed lower 10 years later. Buying and holding the S&P 500 over the long term has shown to average 7% annual returns after inflation.
As you probably encountered in the game, timing trades to “buy low, sell high” is hard, if not impossible. Stock values are volatile—as we’ve been reminded of this week.
Pulling your money out of the market during a downturn might save you from losses in the short term, but you could also miss out on a rebound if you don’t reinvest soon enough.