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While the major US exchanges are only open for six and a half hours per day, we all know that a good part of the news that moves markets occurs outside of those hours. So when the opening bell rings, equities either gap higher or lower based on the news or event. With that in mind, we wondered how this year's gains in the S&P 500 break down in terms of within and outside of the regular trading day.

Using the S&P 500 tracking ETF (NYSEARCA:SPY) as a proxy, we calculated the cumulative YTD return of the S&P 500 during regular trading hours (buying at the open and selling at the close) vs. overnight (buying at the close and selling at the open). We then compared the returns of both of these series to the cumulative return of the S&P 500 for all hours (buy and hold). So far this year, holding equities outside of regular trading has led to a return of 4.3%, which is more than three times the 1.4% return that you would have made by only holding equities when the market is open. Considering the fact that holding equities outside of market hours tends to involve more risk than only holding stocks during regular market hours, it makes a decent amount of sense that traders willing to absorb the overnight risk have seen greater returns.

With both strategies up YTD, the most profitable strategy so far this year would have been to simply buy, hold, and do nothing. Under this strategy investors would have been up 5.8% through yesterday, and the only thing investors would have missed out on would be a whole lot of stress.

click to enlarge

Source: Who Said Buy and Hold Is Dead?