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The Best Returns Can Come During Times of Uncertainty

During times of extreme market stress, even long-term focused investors may sometimes wonder if they would benefit from trying to time the market. We would caution against this.

For instance, if you missed out on the best 5 days in the market from 2000 to the end of 2019, your returns dropped by over 2% a year (see chart below - click to enlarge). Staying in the market versus trying to time it (and be wrong) was the way to go.

When were those 5 best days you had to stay invested in to get better returns? The five best days in the S&P from 2000 through 2019 were all during the height of the financial crisis in 2008 and 2009:

The Five Biggest One Day Percentage Gains in the S&P 500 from 2000-2019

October 13, 2008 +11.6%

October 28, 2008 +10.8%

November 13, 2008 +6.9

March 13, 2009 +9.3%

March 23, 2009 +7.1%

Staying invested during these days was nerve racking. During this time companies such as Lehman Brothers, Washington Mutual, Merrill Lynch and AIG collapsed. One had to sit tight, staying invested through the market low on March 9, 2009 and then not give up on stocks as the market eventually went higher for a full decade. If you did that, you were rewarded.

Was it easy? If you were in the markets during the financial crisis–you remember-it was tough. But itis important torealize that missing out on a market rebound could be even tougher on your long-term financial plan.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills. MEMBER SIPC.