How Can One Capture the Gains, and Avoid the Losses?

by: Jeff Miller

When writing over the last few days we were tempted to cite a good source that discussed investment performance if one missed the biggest market days. We left out this analysis because one also needs to talk about missing the biggest down days. We look for balance and the best evidence.

How does one capture the gains, and avoid the losses? On a random basis, there are always some traders who succeed. There are others who get it exactly backwards! We would all love to have a system that reliably captured these moves.

A Balanced Interpretation

The problem is that big down days and big up days frequently occur in close proximity. A little research led to an interesting analysis from Paul J. Gire, CFP. He took the care to look at both sides of this issue. His excellent article is well worth reading. The key finding is the consistency of buy-and-hold. Getting the big days right is important, if you can do it. Here is the key table:

The overall impact is striking and quite important. Gire shows why it is deceptive to look only at missing the big days on either side.


One successful investing method is to be on the right side of major trends, something we try to do with our TCA-ETF system.

Another method is to depend upon fundamental analysis. This provides the confidence to take advantage of buying opportunities and to know when to exit.

And finally, it is important to have a system that you have tested. Only then can you have the confidence to make the right decisions.