Through the years, I’ve found many correlations between fly-fishing and investing. One being, that the key to catching fish is keeping your fly in the water, and the key to positive investment returns is staying invested in a diversified portfolio of quality investments.

Let’s discuss the false cast. This is the back-and-forth swinging of the rod and fly line that's performed before the fly touches the water. This motion has been romanticized in art work and by film makers to catch the beauty of the sport. The purpose of the false cast is to 1) dry your fly before it hits the water for a longer surface drift 2) let additional line out for a farther cast. In actuality, repeated false casting only cuts down on the amount of time your fly can be taken by a fish.

How does this correlate to timing the market? If you stayed fully invested in the S&P 500 from 1995 to 2015 you would’ve had a 9.85% annualized return. However, if timing the market resulted in you missing the 10 best days during that same time, your annualized return would’ve been reduced to 6.1% (Ro, Sam. How a few poorly-timed trades can torpedo two decades of healthy returns. Business Insider, Mar. 2015). And let’s not forget, since the market bottom on March 9, 2009 until March 8th, 2018 the market is up 313% (Sloan, Allan. It’s hard to even remember the stock market terror of 2009. The Washington Post, Mar. 2018). Let’s face it, it’s extremely difficult to successfully time the market and smart investors obtain better returns by staying invested. Thus, you can’t catch fish if your fly is not in the water.

 

 

Note: Investors cannot invest directly in an index (S&P 500). Unmanaged indexes do not reflect management fees and transaction costs that are associated with some investments. Past performance is no guarantee of future results.