25. Is market volatility your friend?

This chart shows the daily volatility of the Philippine Stock Exchange for the period covering 1987 to 2016, at the extreme it can go up as much as 17% in a single day but can also drop by as much as 12%

This volatility is what is tempting traders to try to time the market by attempting to catch the lows to sell at the high, while there can be some traders who can claim success, the odds of timing it in a consistent manner is very elusive

This table shows the average annual return (9.11%) of the Philippine Stock Index if held for the whole period from 1987 to 2019, attempting to time the market and just missing the best 10 trading days would be returns fall to 5.4%, missing the best 30 days would see returns dropped below a typical time deposit rate, missing the best 50 days would bring returns to negative territory