Whether you’re selling stocks or buying new stocks, bad timing in the market can cost you money. If you’re selling stocks thinking there’s going to be a sustained decline, a quick recovery could be a loss. Many investors and investment gurus believed that the losses incurred in March 2020 due to COVID-19 fears were just the beginning.
If you had sold your stock to get ahead of those losses, you could have missed the V-shaped recovery followed by a year of positive stock performance.
Between January 2, 2020 and March 23, 2020, the S&P 500 fell from 3245 to 2237 and lost 31% of its value. For four months after the March lows, this index was in positive territory and closed at 3257 on June 21, 2020. By the end of the year, it closed at 3732, which is 15% higher than it was at the beginning.
If you had invested the money in that time period without fear of a further fall, you would have made a 45% profit from the bottom of the market before the close at the end of the year.