If you considered pulling your money out of the market when COVID-19 hit, you were not alone. Many people felt that way, some acted on it, and that, my friends, is a perfect example of attempting to time the market. You may have thought similarly when U.S. tariff news tanked the market again this year. It’s hard to stay invested when things look grim, but in my experience, time in the market beats timing the market every time.
As a holistic financial planner, I have studied this phenomenon extensively because I feel deeply responsible for my clients’ success and don’t give advice lightly. In short, the most important things to remember when investing in the stock market are that:
- You are investing in great companies with tremendous earnings potential.
- Stock prices reflect those earnings and will fluctuate (but tend to grow) over time.
- Serious investors do not “play” the market. Instead, they ignore stock price movements, investment fads, and inflammatory news and focus on long-term trends.
I realize this sounds simple, and it is, but it is far from easy. It’s only natural to attempt to time the market in reaction to threats, but it’s a trap, and the financial media only makes things worse because they encourage such behavior for profit. In the following post, I will explore short-term market timing activities vs. long-term investment strategies in depth so you can better understand why you should develop a plan and then stand your ground.
Time in the Market vs Timing the Market
What Is Market Timing (aka Timing the Market)?
“Market timing” refers to any attempt to buy or sell stocks based on predictions about how the market will change. The goal, of course, is to achieve a better return or lose less money than other investors by anticipating market movements. These predictions can arise from just about anything. Let’s look at some examples of behaviors market timers engage in to give you a sense of what I mean.
Common Marketing Timing Behaviors
- Mining the News Cycle
One common market timing strategy is to monitor the news cycle and anticipate how the market will react so you can take advantage of opportunities. For instance, some people track the U.S. Federal Reserve’s announcements about upcoming interest rate changes. Then, they decide where and when to invest, depending on whether they expect rates to rise or fall. - Chasing Funds with High Returns
Another approach is to buy mutual funds that are performing well while selling those that are performing poorly. In this case, investors chase performance by moving money around in response to the ebbs and flows of the market. - Deal Seeking (aka Fundamental Analysis)
Some bold investors scour the market in search of individual stocks that are under- or overvalued, using an array of criteria, including the almighty “hunch.” They aim to buy when market prices are unreasonably low, then sell quickly when the correction occurs. - Using Cash as a Safety Net
When equity markets are volatile or in times of recession, some people delay investing or retreat from the market altogether, even if they don’t need the funds in question anytime soon. Since they are concerned about losing money, they think avoiding the turbulence and waiting for better times is wise. - Technical Analysis
Examining a particular stock’s historical price and volume trends with charts is another approach. The idea here is to predict good entry and exit points. Although this method may appear mathematically sound, make no mistake – it’s market timing.
We are just scratching the surface, of course. Hundreds of strategies exist for attempting to beat the market, ranging from those that seem logical to others that are downright shady.
However, some people engage in market timing behaviors unintentionally. For example, they don’t intend to trade actively but lack a strategy, so they react to scary financial news by moving money around. They don’t realize that the media outlets share this news because it keeps people watching, resulting in advertising revenue from companies pushing investment products. Unfortunately, that exposes those people to the pitfalls of market timing, which include missed opportunities, increased risk, and excess costs.
Is Stock Market Timing Ever Worth It?
The trouble is, timing the market typically doesn’t work. Everyone hears stories about people who struck it rich by buying low and selling high, but those are exceptions and a distraction from what works best. In reality, perfect timing is nearly impossible, and many strategies result in buying high and selling low, which is the opposite of what we are trying to do here. Furthermore, every move is an opportunity for errors, transaction costs, etc., so trying to time the market typically leads to poorer performance.
But don’t take my word for it. Consider the following chart from the Dalbar QAIB 2025 Report. Researchers compared the 30-year average annualized return for investors vs. the performance of the S&P 500 index and found that the S&P 500 outperformed investors by nearly 1% per year. That may not sound like much, but let’s put that in dollars. If the average investor tucked away $100,000, they would have $1,768,892 in 30 years, but the S&P 500 would be worth $2,240,247. That’s nearly half a million dollars in lost earnings!
Why Timing the Market Doesn’t Work
Why did the S&P 500 perform so much better? Because the average investor makes emotionally driven decisions, whereas the S&P 500 tracks natural company growth over time.
There is always something concerning going on in the world, so I don’t blame anyone for trying to protect themselves from volatile market conditions. But unfortunately, few investors have the skills to do so effectively. For example, consider the following news from 2011:
- The S&P 500 dropped about 18% in 4 months, from 1363.61 on April 29th to 1131.42 on September 30th.
- In August 2011, the United States was stripped of its AAA bond rating, sending the S&P 500 down 4.31% on August 4th, then another 5.5% on August 5th, a shocking development dubbed Black Monday.
- On October 5th, Steve Jobs, co-founder of Apple, passed away, sparking concerns about the company’s prospects.
Investors weren’t exactly enthusiastic about owning stocks, even Apple, one of Wall Street’s darlings.
In October of 2011, Apple reported quarterly earnings of $6.62 billion. Remember, Apple, although certainly a high-profile stock, is nothing more than a company that sells products for a profit. Coming out of the dark clouds it faced in 2011, Apple continued to sell products for a profit over the years. In May of 2025, Apple reported earnings of $24.78 billion. That means Apple’s profit essentially doubled twice since 2011. The company’s value (which the stock price reflects) also grew exponentially. Given how much money it made, it makes sense that the company would become more valuable.
If you were an Apple investor in 2011 and could manage your emotions enough to hold on to that investment, you would be pretty happy with that choice ten years later, and still be pleased today. Other companies have similar stories. Here is an exercise to try when you are worried about your investments: print a list of S&P 500 businesses, put a check next to those you patronize, and ask yourself if you plan to stop buying from them anytime soon.
Buying companies (stocks) means buying earnings growth. The best time to invest money is when you have it. Don’t overthink it. That is the path to building long-term wealth.
Of course, disappointments will also occur, and no one can guarantee future results, which is why we diversify. We typically invest in funds that mimic broad indexes. Historically, the successes outweigh the failures, resulting in sustained growth.
There is no quick and easy solution for investing. You must have a plan, discipline, and fortitude. Reacting to news cycles, buying the latest investment products, and attempting to beat the market is akin to engaging in crash dieting or get-rich-quick schemes. These strategies appeal to us because they gloss over the hard work required to do great things, catering to our fears and laziness.
What Does Time In the Market Mean?
The phrase “time in the market” refers to an investment process that favors slow but steady growth by employing a buy-and-hold strategy. In other words, the investor:
- Puts aside some cash reserves.
- Accepts the ups and downs of the market as “normal.”
- Realizes that companies need time to grow.
- Does not attempt to time the market.
Instead, they steadily save money for the future in a diversified portfolio that works in concert with their holistic financial plan.
That does not mean you should drop your money into the market and totally forget about it. On the contrary, ideally, your plan will show how you expect these investments to help you meet your goals and live a happy life. Then you can adjust as your financial plan evolves.
What Strategies Can Help You Maximize Returns?
The most important thing is to just get into the market. And be sure to review historical data to gain perspective and avoid making decisions from a place of fear when things get rough. Fearful decisions lead to selling low and buying high, crushing any chance of a good return. To that end, below are some healthy investment strategies that don’t involve timing the market.
- Dollar-Cost Averaging
Suppose you come into a large sum of money due to a bonus, inheritance, or some other event, and wish to invest it in the market. Dollar-cost averaging is a great way to do so without obsessing over timing. Dollar-cost averaging involves investing money at regular, predetermined intervals, knowing that while the stock prices will vary each time, the highs and lows typically average out. That happens naturally when you regularly put money into a 401(k), so all you are doing is mirroring that approach with a discrete set of funds.
- Rebalancing
Over time, the mix of funds in your portfolio will shift one way or another due to market movements, dividends, and continued investments. Therefore, it is sensible to reassess your accounts periodically and adjust your mix based on whatever new information has come to light.
For example, if you are near a point when you need to pay for college or another big goal, this would be an excellent time to pull funds out of equities and invest them into more stable assets due to the shortened time frame.
- Strategically Harvesting Losses or Gains
Selling some of your investments at a loss or harvesting a gain for tax purposes could be wise occasionally. For example, if you come into a large sum of taxable money that will result in a hefty tax bill, you can take losses to offset that gain. Another example would be purposefully recognizing gains in lower-income years to get advantageous tax rates, even if you don’t need the funds and choose to reinvest.
Is There Ever a Time to Get Out of the Market?
Sometimes clients ask me if I would ever recommend exiting the market, perhaps in anticipation of a significant economic blow, such as a war, pandemic, or other disaster. But, in my view, emotional decisions like this typically backfire because knowing when to get out and when to return is impossible, leaving you at risk of making the wrong decision twice!
Don’t get me wrong; there is no judgment here. The world is scary, and the desire to either run away or protect what is yours from a perceived threat is a natural and arguably primal response, whereas doing nothing leaves you feeling exposed. Furthermore, one could argue that timing it right could, indeed, result in a benefit.
However, history has shown us that such attempts are largely unsuccessful. Worse yet, they often result in market investors selling low and buying high, which weakens their position, leaving them worse off than they would have been if they had stood their ground.
Time horizons must dictate how you invest your money. If something changes to shorten a time horizon (early retirement, job loss, etc.), a discussion about lowering risk may be appropriate. In other words, make investment decisions based on your financial plan, not in reaction to news headlines. One we can control, the other we cannot.
The Bottom Line: Time in the Market Beats Timing the Market
At Golden Road Advisors, we urge clients to apply a long-term view to any stock market investment decision. And we mean 10, 20, or when planning for multiple generations, even 50 years, because you are investing in companies, and companies need time to grow. Attempting to time the market only leads to missed opportunities, increased risk, and excess costs.
It is difficult to resist the siren song of a quick win or the allure of retreating to your cave when things get scary. So, find a good financial advisor and ask them to help you build a financial plan. That plan should include a cash reserve (so you can stomach some ups and downs), a diversified investment portfolio, and a strategy for how you will manage your emotions and reactions in response to the chaos our world inevitably delivers.
If you would like to explore working with Golden Road Advisors, please visit our why page to learn more or reach out to schedule a free consultation.
Editor’s Note: This blog was initially published in August 2022. It was last updated for accuracy and thoroughness in July 2025.
Disclosure: The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.
