Investors getting whipsawed by market gyrations over the past two years have been moving to the sidelines and stowing away their cash. That could be a costly mistake, according to strategists at money management titan BlackRock. The firm looked back at two decades of market behavior prior to the sharp slump of 2022 and found that missing even a few rally days could cost hundreds of thousands of dollars in returns. Using a $100,000 investment as a base, the firm found that missing the best five days of the 2002-2021 period cost more than $200,000, while missing the best 25 days saw a loss of returns totaling nearly half a million dollars. Source: BlackRock The lesson is important, the firm said, in light what it terms bear-market rallies that have been taking place, especially in the fourth quarter of 2022. "Although those bear market rallies can feel like cruel teasers of a turnaround, history shows that some of the market's best days come within these episodes," wrote Tony DeSpirito, the firm's chief investment officer of U.S. fundamental equities and portfolio manager of the BlackRock Equity Dividend Fund. "This is a key reason long-term investors should stay invested even when it may not feel good. Missing those top-performing days can have a meaningful impact across time, as shown below," he added. Investors have moved heavily to the sidelines over the past several years, with money market mutual fund balances now at $4.8 trillion, according to the Investment Company Institute . That's up from $3.3 trillion at the end of 2018. DeSpirito said the data show that, despite the turbulence of the past few years, "it's time in the market that matters more than timing the market."
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