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Nassim Taleb is remarkably brilliant. It's his work that's cited in the article. In my opinion, there are 2 choices, a misquote, if the article is wrong, or a misunderstanding on the part of the reader. There are a few things going on. Thanks to member Justin, I fixed the Wikipedia article link. I recall his assertion from the book "The Black Swan" (p275). And here it is -

and the referenced chart -

Now, with thanks to member Money Ann, who actually noted that the product of the 10 best days, was, in fact 64%.

Putting on my math hat, those ten days, cumulatively, multiplied one's wealth by 1.64. Game over. Had you 'not' been in the market the full ten days, it doesn't matter how far back you go, nor how far forward. Pull those numbers out and you have to divide your wealth by 1.64. (The only argument one might have is that, for example, deposits are made along the way, I, for instance, only started investing in 1984, so earlier numbers don't matter. That's a distraction, not the point of the long term observation).

To simplify my examples, say there was one day that the S&P went up 10% (for easy math). And we have the 4300% return long term that Money Ann cites. Remove that one day and you'd have only 3909% return. Not 4290%.

So, in fact, no surprise, the citation is accurate, although in the book, Taleb is more vague.

If my answer here needs any clarification, I am happy to do so. Please comment and I'll return, edit, and clean up comments.

Nassim Taleb is remarkably brilliant. It's his work that's cited in the article. In my opinion, there are 2 choices, a misquote, if the article is wrong, or a misunderstanding on the part of the reader. There are a few things going on. Thanks to member Justin, I fixed the Wikipedia article link. I recall his assertion from the book "The Black Swan" (p275). And here it is -

and the referenced chart -

Now, with thanks to member Money Ann, who actually noted that the product of the 10 best days, was, in fact 64%.

Putting on my math hat, those ten days, cumulatively, multiplied one's wealth by 1.64. Game over. Had you 'not' been in the market the full ten days, it doesn't matter how far back you go, nor how far forward. Pull those numbers out and you have to divide your wealth by 1.64. (The only argument one might have is that, for example, deposits are made along the way, I, for instance, only started investing in 1984, so earlier numbers don't matter. That's a distraction, not the point of the long term observation).

To simplify my examples, say there was one day that the S&P went up 10% (for easy math). And we have the 4300% return long term that Money Ann cites. Remove that one day and you'd have only 3909% return. Not 4290%.

So, in fact, no surprise, the citation is accurate, although in the book, Taleb is more vague.

If my answer here needs any clarification, I am happy to do so. Please comment and I'll return, edit, and clean up comments.

Edit - in response to Dennis’ comment. Say there were a crash, and right after, the market recovered 50% in just one day. In a history of daily returns, we’d now have 1.5 as a factor. Now, over a long period of time, decades, we see the market up 1900%, i.e. the multiplication result is 20, as we flip from percents to factors. Remove the 1.5, and the result is simply 10, or growth of 900%. That one day, in or out, made a huge difference. It’s for the reader to keep an open mind, and realize it doesn’t take too many days to multiply to get that 50%. In fact, it’s not even 10. The moral of Taleb’s story is simply that trading, getting in and out of the market is a greater risk than staying in for the long term. (And note to Dennis - mhoran already made the same 50% math example. This is just the same in my own words.)

Nassim Taleb is remarkably brilliant. In my opinion, there are 2 choices, a misquote, if the article is wrong, or a misunderstanding on the part of the reader. There are a few things going on. Thanks to member Jusin, the Wikipedia article link is now working again. I recall his assertion from the book "The Black Swan" (p275). And here it is -

and the referenced chart -

Now, with thanks to member Money Ann, who actually noted that the product of the 10 best days, was, in fact 64%.

Putting on my math hat, those ten days, cumulatively, multiplied one's wealth by 1.64. Game over. Had you 'not' been in the market the full ten days, it doesn't matter how far back you go, nor how far forward. Pull those numbers out and you have to divide your wealth by 1.64. (The only argument one might have is that, for example, deposits are made along the way, I, for instance, only started investing in 1984, so earlier numbers don't matter. That's a distraction, not the point of the long term observation).

To simplify my examples, say there was one day that the S&P went up 10% (for easy math). And we have the 4300% return long term that Money Ann cites. Remove that one day and you'd have only 3909% return. Not 4290%.

So, in fact, no surprise, the citation is accurate, although in the book, Taleb is more vague.

If my answer here needs any clarification, I am happy to do so. Please comment and I'll return, edit, and clean up comments.

Nassim Taleb is remarkably brilliant. It's his work that's cited in the article. In my opinion, there are 2 choices, a misquote, if the article is wrong, or a misunderstanding on the part of the reader. There are a few things going on. Thanks to member Justin, I fixed the Wikipedia article link. I recall his assertion from the book "The Black Swan" (p275). And here it is -

and the referenced chart -

Now, with thanks to member Money Ann, who actually noted that the product of the 10 best days, was, in fact 64%.

Putting on my math hat, those ten days, cumulatively, multiplied one's wealth by 1.64. Game over. Had you 'not' been in the market the full ten days, it doesn't matter how far back you go, nor how far forward. Pull those numbers out and you have to divide your wealth by 1.64. (The only argument one might have is that, for example, deposits are made along the way, I, for instance, only started investing in 1984, so earlier numbers don't matter. That's a distraction, not the point of the long term observation).

To simplify my examples, say there was one day that the S&P went up 10% (for easy math). And we have the 4300% return long term that Money Ann cites. Remove that one day and you'd have only 3909% return. Not 4290%.

So, in fact, no surprise, the citation is accurate, although in the book, Taleb is more vague.

If my answer here needs any clarification, I am happy to do so. Please comment and I'll return, edit, and clean up comments.

Nassim Taleb is remarkably brilliant. In my opinion, there are 2 choices, a misquote, if the article is wrong, or a misunderstanding on the part of the reader. There are a few things going on. The Wikipedia article link is broken although member found good copies. I recall his assertion from the book "The Black Swan" (p275). And here it is -

and the referenced chart -

Now, with thanks to member Money Ann, who actually noted that the product of the 10 best days, was, in fact 64%.

Putting on my math hat, those ten days, cumulatively, multiplied one's wealth by 1.64. Game over. Had you 'not' been in the market the full ten days, it doesn't matter how far back you go, nor how far forward. Pull those numbers out and you have to divide your wealth by 1.64. (The only argument one might have is that, for example, deposits are made along the way, I, for instance, only started investing in 1984, so earlier numbers don't matter. That's a distraction, not the point of the long term observation).

To simplify my examples, say there was one day that the S&P went up 10% (for easy math). And we have the 4300% return long term that Money Ann cites. Remove that one day and you'd have only 3909% return. Not 4290%.

So, in fact, no surprise, the citation is accurate, although in the book, Taleb is more vague.

If my answer here needs any clarification, I am happy to do so. Please comment and I'll return, edit, and clean up comments.

Nassim Taleb is remarkably brilliant. In my opinion, there are 2 choices, a misquote, if the article is wrong, or a misunderstanding on the part of the reader. There are a few things going on. Thanks to member Jusin, the Wikipedia article link is now working again. I recall his assertion from the book "The Black Swan" (p275). And here it is -

and the referenced chart -

Now, with thanks to member Money Ann, who actually noted that the product of the 10 best days, was, in fact 64%.

Putting on my math hat, those ten days, cumulatively, multiplied one's wealth by 1.64. Game over. Had you 'not' been in the market the full ten days, it doesn't matter how far back you go, nor how far forward. Pull those numbers out and you have to divide your wealth by 1.64. (The only argument one might have is that, for example, deposits are made along the way, I, for instance, only started investing in 1984, so earlier numbers don't matter. That's a distraction, not the point of the long term observation).

To simplify my examples, say there was one day that the S&P went up 10% (for easy math). And we have the 4300% return long term that Money Ann cites. Remove that one day and you'd have only 3909% return. Not 4290%.

So, in fact, no surprise, the citation is accurate, although in the book, Taleb is more vague.

If my answer here needs any clarification, I am happy to do so. Please comment and I'll return, edit, and clean up comments.