The Stock Market Is a Coin Flip—Until It Isn’t

Every investor has checked their portfolio on a down day and felt the sting of red numbers. The market can feel unpredictable, sometimes even random. And that feeling isn’t far off from reality.

From 1951 to 2024, the S&P 500 had positive daily returns just 53.7% of the time, according to Crestmont Research. That’s barely better than a coin flip. But here’s the key: the longer you stay invested, the less random the market becomes.

Short-Term Volatility vs. Long-Term Growth

Daily market moves are full of noise: reactions to headlines, economic data releases, and investor sentiment shifts. But zoom out, and the stock market tells a different story. Over decades, the trend is unmistakable: the market rises. The S&P 500 has historically delivered an average annual return of around 10%, despite short-term pullbacks, recessions, and bear markets.

The Cost of Reacting to Noise

Investors who get caught up in short-term volatility risk missing the market’s best days. Studies have shown that missing just a handful of the best-performing days in the market can drastically reduce long-term returns.

For example, an investor who stayed fully invested in the S&P 500 from 2003 to 2023 saw a return of 9.8% per year. But missing just the 10 best days during that period cut their return to 5.6%. Miss the 20 best days, and the return dropped to 2.6%.

Time in the market beats timing the market.

Focus on the Signal, Not the Noise

Successful investing isn’t about predicting short-term moves. It’s about staying disciplined and letting compounding work in your favor. The market’s daily movements may be a coin flip, but long-term patience stacks the odds in your favor.

Stay focused on the big picture. Short-term volatility is noise, long-term growth is the signal.