SFS Insights

Keeping Perspective In Times Like These

November 18th 2022

The High Cost of Cashing Out Stocks

Over time, an investor who stays invested is likely to outperform an investor who jumps

 in and out of the market.

Investing in the stock market gives you a chance to profit from innovation, economic progress, and compound growth. But to get results, you need patience and time.

While history can't predict future performance, it can give you an idea of what could happen if you try to take a shortcut or “panic sell” when markets are fluctuating.

From 1990 to 2020, the S&P 500 Index’s annualized gain was 7.5% (excluding dividends), but the average equity investor’s return was only 2.9%.Why the 4.6% gap? Because when stock prices begin to fall, many investors give in to fear, which drives them to sell their investments – even though it may not be in their best interest.

It’s the investors who are patient and can maintain their cool on the bumpy road of volatility who are most often rewarded. As Warren Buffet once famously said, investing in the stock market is “a way for the impatient to transfer money to the patient.”2

  • Stocks garnered support this week from more evidence of slowing inflation in producer price data.

  • October’s producer price index (PPI) declined to 8.0% annually, down from 8.5% in September, after economists surveyed by Bloomberg forecasted 8.3%. Annual core PPI also surprised at 6.7% year over year, compared to a consensus estimate of 7.2%. The PPI report comes after the Consumer Price Index (CPI) came in lower than expected last Thursday, with consumer prices rising 0.4% in October and core prices adding 0.3%.

  • The decline in October’s PPI adds more support for the Fed to slow down the pace of rate increases. Federal Reserve (Fed) Governor Brainard’s comments earlier this week were seen by market participants as less hawkish on rates as she stated that it may soon be appropriate to move to a slower pace of Fed rate hikes.  

Source: LPL Research, Bloomberg, DALBAR, ClearBridge Investments 6/30/21

Source: “Winning In The Market With The Patience Of The Wright Brothers And Warren Buffett,” Forbes, (January 2018).

The opinions voiced in this material are for general information only and are not intended to provide specific advice or

recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Robert Schermerhorn, CFP® 

Jamie Usas, CFP®

Operations Manager

Amanda Friedman

Wealth Consultant

Andrew Chapman, CFP®

Operations Research Associate

Lauren Bliss

Office Coordinator


Saratoga Financial Services

18 Division Street, Suite 305

Saratoga Springs, NY 12866

Phone: (518) 584-2555


Securities & advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC

Facebook  LinkedIn