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There is a simple quote attributed to Woody Allen that I’ve always found insightful and useful: “Eighty percent of success is showing up.”
I like this quote because so few people appreciate its profundity. When I invoke it, most people react dismissively: “Of course, showing up is important, but anyone can show up.” How untrue. Showing up is frequently difficult and grinding, which is why it is so hard to sustain.
Showing up matters in life, and it matters in investing. You have to be invested to collect a dividend or book a return. Many investors I’ve met don’t collect a dividend or book a gain because they unable to continually show up. They are unable to stay invested due to fear, boredom, disappointment, or impatience.
When I have confidence in my analysis, I show up. I don’t continually peek over the fence for greener grass or troll the financial pages for a more titillating investment. I know that if I stay with an investment – if I continually show up – something good will happen. I just have no way of knowing when that something good will happen… and no one else knows, either.
Almost all big stock market gains are concentrated in just a few strong trading days. Failing to show up on those strong days can dramatically damage returns. The table below produced by Index Fund Advisors covers the S&P 500 Index from Jan. 1, 1994 through Dec. 31, 2014. The cost an investor pays for not showing up, even for a few days, is indeed steep.
The Cost of Failing to Show Up
| $10,000 Invested in the S&P 500 Index | S&P 500 Annualized Return | Terminal Value of the $10,000 | Gain/Loss | Impact of Missing Days |
| All 5,037 Trading Days | 9.22% | $58,352 | $48,352 | None |
| Less the 5 Biggest-Gain Days | 7.00% | $38,710 | $28,710 | -40.62% |
| Less the 10 Biggest-Gain Days | 5.49% | $29,121 | $19,121 | -60.45% |
| Less the 20 Biggest-Gain Days | 3.02% | $18,146 | $8,146 | -80.15% |
| Less the 40 Biggest-Gain Days | -1.02% | $8,149 | -1,851 | -103.83% |
Source: Index Fund Advisors
What holds for the S&P 500 holds for individual stocks. I know from experience with the High Yield Wealth portfolio. Showing up has paid off, even if there were times I would have preferred to stay in bed.
BGC Partners (NASDAQ: BGCP), a large financial and commercial broker, serves as a dramatic example of why showing up matters.
BGC was first recommended for the High Yield Wealth portfolio in Nov. 2011. Over the subsequent 18 months, BGC shares traded flat to lower on waning institutional trading volume due to concerns over new financial regulations. At the same time, BGC was positioning itself – through purchases of bankrupt commercial real estate broker assets – as a leading commercial broker.
As BGC meandered lower, pressure grew to stop showing up – to sell. I saw it differently: I liked the opportunities BGC was pursuing in commercial real estate brokerage. I also liked the management, which saved the company after two-thirds of its employees were killed in the 9/11 attack. I knew something good would happen. I just didn’t know when.
The something good happened on April 1, 2013, when BGC’s share priced popped 48% after the company announced it had negotiated a sale of one of its trading platforms to Nasdaq OMX Group (NASDAQ: NDAQ). The price BGC negotiated was higher than the entire market cap of the company at the time.
Investors that followed my recommendation to continue showing up, and to continue show by buying into the lower price, were amply rewarded with a higher yield and higher return on their investment.
You might argue that by not showing up, you’d have missed the worst-performing days, which hurt total return. True enough, but the bias for the stock market, and for individual stocks with sound underlying business, is to rise over time. Therefore, my bias is to position myself 80% on the way to success by showing up.
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