How should the Wall Street maxim “Buy low, sell high” apply? Consider drawdowns and hypothetical investments in the S&P 500.
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SP500 percent returns and drawdown
If you bought theS&P 500 at the 2007 peak — before the Great Financial Crisis — you’d be up nearly 260% today. However, if you bought the bottom (after a severe >50% drawdown)… You’d be up over 700%.
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SP500 percent returns and drawdown
After 2008, when the fiat monetary system almost failed, gold experienced a multi-year bull run. If you bought gold at the 2012 peak, however, you’d be up*only* 40% today.
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Gold percent returns and drawdown
On the other side of the coin, if you bought the gold lows in 2015 — you’d be up over 140% today. Of course, perfect entries are nearly impossible but the conclusion is clear: timing matters in investing.
