The Shocking Returns Of The Investor Who Bought Only At Market Tops



  • The S&P 500 is at an all-time-high.
  • The idea that the stock market is in bubble territory and about to collapse is a recurring theme that scares and pushes many investors away.
  • Nobody can predict when the next market crash will occur. But what happens if you consistently invest at the worst possible time?
  • To find out, I estimated the returns of an investor who would stay in cash before going all-in at all market peaks for the past 50 years.
  • The results might surprise you.
  • Looking for a portfolio of ideas like this one? Members of App Economy Portfolio get exclusive access to our model portfolio. Get started today »

Some things never change.

When the market reaches a new all-time-high, many pundits come out of the woodwork to express skepticism on what the future may hold. They express their high degree of pessimism and suggest investors should hunker down, raise cash and wait for a large pullback.

As explained before, when it comes to investing, I believe being an optimist is a superpower. When you look at the past 150 years, the stock market has been an outstanding wealth-creation machine for those who embraced it. The market inexorably rises in the footsteps of GDP growth, while the world goes through challenges of all kinds, from wars, financial crises, crashes in commodities, to pandemics.

This has prompted me to:

Growth of GDP per Capita vs Stock Prices since 1871


While I have zero insights on where the market is going next, I'm always fascinated to hear about people who are eager to be out of the market and stay in cash for years on end, just to be able to say "I told you so," when the next sell-off inevitably occurs.

Yes, market crashes happen, and I wrote an entire article about how to prepare for it. As a reminder, here is the historical frequency of pullbacks identified since 1928:

Market drawdown Historical Frequency
10% Every 11 months
15% Every 24 months
20% Every four years
30% Every decade
40% Every few decades
50% 2-3 times per century

According to a research note from Bank of America Securities, the average time for the market to get back to where it was after a drawdown of 20% or more is 4.4 years. This is why most advisors recommend to invest in equities only if you intend to hold your

ChartData by YCharts

ChartData by YCharts

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This article was written by

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Unlock a portfolio built to benefit from the rise of the app economy
My name is Bertrand Seguin. I'm a former PwC consultant and veteran financial executive in the video game industry. I've spent 12 years at Bandai Namco Entertainment, leading the Financial Planning and Analysis team in the transition to Digital, Mobile, and Game-as-a-Service. I hold a Master of Science in Management and Finance.

My portfolio is built to disproportionately benefit from the rise of the app economy, the range of economic activity surrounding mobile applications. My investment plan and asset allocation are a result of secular trends I have identified (macro) and in which I take individual bets (micro). I invest with a very long time horizon (ideally 10+ years).

I am fortunate enough to have seen my strategy deliver outstanding results throughout the years.

Discipline and consistency win the game over time. Unfortunately, many investors violate their own model or strategy when their portfolio performance is temporarily disappointing. I would rather sell too late than too early, so I tend to never sell. I let my winners compound to a significant portion of my portfolio and let my losers become insignificant over time.


All App Economy Insights contributions to Seeking Alpha, or elsewhere on the web, are personal opinions only and do not constitute investment advice. All articles, blog posts, comments, emails, and chatroom contributions by App Economy Insights - even those including the word "recommendation" - should never be construed as official business recommendations or advice. In an effort to maintain full transparency, related positions will be disclosed at the end of each article to the maximum extent practicable. The premium service App Economy Portfolio is a research and opinion subscription. I am not registered as an investment adviser. The majority of trades are reported live, but this cannot be guaranteed due to technical constraints. Investors should always do their own due diligence and fact-check all research prior to making any investment decisions. Liability of all investment decisions reside with the individual investor.

Disclosure: I am/we are long AAPL AMZN FB GOOG NFLX VOO CRWD ESTC PINS ROKU SFIX TWLO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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