Timing the Market vs. Time in the Market
On any given day you can come across a major success story in the markets. An investor managed to get in and out of the market at the perfect time. They bought low, sold high, and rode off into the sunset on their private yacht.
I compare these headlines and success stories to winning the lottery or hitting the jackpot on a Vegas slot machine. You always hear about the winners, never the losers, and most times there are no repeat winners.
The buy low sell high winning strategy seems so simple but is nearly impossible and can be a costly mistake to investors.
Timing the Market
It is human nature to have the desire for control. When headlines and news create volatility in the market, it can lead to feeling like control over your money is slipping away.
A reaction can be to pull money out of the market and sit on the sidelines until things settle down.
The problem with this is – How will you know when things have settled down? Investors often feel the market has settled when it begins to rebound and post positive returns. At this point, it is too late, and now you are buying the same shares for a higher price. In this example – you have sold low and bought back in higher.
Markets move unpredictively in the short-term and even the top economists are rarely consistently right in their market predictions.
Missing the best days in the market
If you look back in time, the best days in the market often occur during extreme volatility and the best and worst days often happen together. Here are some top performing S&P500 days as recently as April of this year:
04/09/2025 +9.52%: Trump pauses tariffs on China
03/24/2020 +9.4%: COVID Stimulus package announced and possibility of reopening the country
03/13/2020 +9.3%: Trump declares national emergency in response to COVID
10/13/2008 +11.6%: Coordinated efforts by governments and central banks around the world to pump money into the frozen global economy
10/28/2008 +10.8%: Optimism of the Fed cutting interest rates
03/23/2009 +7.1%: Near the end of the 2008 Financial Crisis, the Government and Federal Reserve announce measures to support the financial system.
10/21/1987 +9.1%: Two days after "Black Monday"—the worst single-day market crash in history
What if you had sat on the sidelines, missed these top days, and waited for the market to settle down?
Here’s an example from JPMorgan on missing the market’s best days:
Take a $10,000 investment in the S&P 500 index. If an investor put that sum in on Jan. 3, 2005, and left that money untouched until Dec. 31, 2024, they would have amassed $71,750, for a 10.4% annualized return over that time.
Yet if that same investor had sold their holdings — and therefore missed the market’s best days — they would have accumulated much less.
For the investor who put $10,000 in the S&P 500 in 2005, missing the 10 best market days would bring their portfolio value down from $71,750 had they stayed invested through the end of 2024 to $32,871, for a 6.1% return.
Time in the Market
Having success in the market isn’t about predicting what’s going to happen next – it's about staying disciplined through the ups and downs. Long-term patient investors are rewarded with compounded returns and growth that can’t be captured if you are jumping in and out of the market.
Here at RPJ we build your portfolio based on your goals, risk tolerance, and time horizon, while relying on asset allocation to smooth over the ups and downs.
The market will always have ups and downs – that is the price of admission for long-term growth. In order to build wealth, it is important to stay disciplined and stick to a diversified strategy.
Sources:
https://www.wcvb.com/article/best-stock-market-days-history/64435386
https://www.cnbc.com/2025/04/07/selling-out-during-the-markets-worst-days-can-hurt-you-research.html