2024 - Time in the Market Matters

The S&P 500 only had 35 more winning than losing days in 2024, and just 16 of those days “explain” the index’s entire 23.3 percent price return last year.

At the start of the year, they were tied to Gen AI. Then the big days came on hopes for rate cuts. After that, the S&P saw some of its best days as it shrugged off sharp selloffs. Most recently, the year’s best days were in response to the US general election. For the stock market and data nerds, I’ve outlined the data provided by DataTrek Research at the bottom.

This is a prime example of how difficult it is to time the market, and why the adage of “time in the market beats timing the market.”

Timing the market seems simple enough: buy when prices are low and sell when they’re high. But there is clear evidence that market timing is difficult. Often, investors will sell early, missing out on a stock market rally. It can also be unnerving to invest when the market is flashing red. This is one reason we are constantly reminding our clients and readers to tune out the noise, as stock markets will always give you an emotional reason to sell.

By contrast, staying invested through highs and lows has generated competitive returns, especially over longer periods. Check out our recent post called Zoom Out and Be a Long-Term Investor. The below graphic shows how trying to time the market can take a bite out of your portfolio value, using 20 years of data from JP Morgan.

The S&P 500 was up 23.3% in 2024 and just 16 days “explain” that gain. Before we get into those exceptional 1-day returns and what they tell us about this year’s important investment narratives, here is some background data to consider:

• 251 trading days​ in 2024

• 143 of those (57​%) registered a positive return.

• 108 days (43​%) had a negative return.

The difference of 35 days shows how evenly balanced even a winning year can be, so let’s dig into 2024’s strongest 1-day returns. 

Here they are, in chronological order:

January 8th (+1.4 percent): Nvidia unveils new AI chips one day before the start of the annual CES show in Las Vegas.

January 19th (+1.2 pct): Taiwan Semi’s CFO says their business has “bottomed out” due to “the rising emergence of generative AI-related applications”.

February 1st (+1.2 pct): The day after the Fed’s first meeting of the year, when the S&P had dropped 1.6 pct, Apple, Meta, and Amazon all reported Q4 earnings after the bell, and the latter two exceeded expectations.

February 22nd (+2.1 pct): Nvidia crushes earnings, rallying 16 percent and taking other AI plays higher in its wake (AMD +11 pct, META and AMZN +4 pct).

April 23rd (+1.2 pct): A good day in a bad month, with the S&P rallying strongly 2 days after the month’s lows.

May 3rd (+1.3 pct): A weaker than expected April Jobs Report (+175,000 versus +243,000 consensus), combined with better than expected earnings from Apple, helped stocks rally on hopes for rate cuts against the backdrop of still strong Tech earnings.

May 15th (+1.2 pct): The April CPI report comes in lower than expected (+0.3 versus +0.4 pct), further spurring hopes for rate cuts.

June 5th (+1.2 pct): Nvidia joins the $3 trillion market cap club for the first time, adding more fuel to the momentum-driven move in Tech stocks generally.

July 31st (+1.6 pct): At his post-FOMC meeting press conference, Chair Powell suggests a September rate cut was “on the table” if inflation continued to decline.

August 8th (+2.3 pct), August 13th (+1.7 pct) and August 15th (+1.6 pct): Three of the 6 best days in 2024 came as part of a snapback rally after the August 5th lows. The S&P tumbled 6.1 percent from July 31st through that day on the back of Japanese yen and Nikkei volatility.

September 9th (+1.2 pct): After another early-month selloff, this time driven by a weakening US labor market (S&P down 1.7 pct on the August Jobs Report), US large caps start to find their footing again.

September 19th (+1.7 pct): Investors slept on the prior day’s Fed’s 50 basis point rate cut and decided it was good news.

November 5th (+1.2 pct) and November 6th (+2.5 pct, the best day of 2024): US election day was November 5th. Stocks rallied on the anticipation that former President Trump would regain the White House and added to those gains once that result was certain and also because Republicans won both House and Senate.

Source: DataTrek Research