Investing

Time in the Market vs Timing the Market

Market timing feels rational. The data consistently shows otherwise. Missing just the ten best days in a decade can cut long-term returns in half.

Investing

Time in the Market vs Timing It.

One strategy has decades of evidence. The other has decades of underperformance.

Market timing feels rational. The data consistently shows otherwise. Missing just the ten best days in a decade can cut long-term returns in half.

50%reduction in 20-year portfolio returns from missing the ten best market days — which cluster around the worst days, making them nearly impossible to time

The Situation

The Timing Temptation

Market timing — moving money in and out of investments based on market forecasts — is intuitively appealing and nearly universally unsuccessful over long periods. The reason is structural: the best market days cluster around the worst days. An investor who exits to avoid the lows frequently misses the recoveries that follow immediately after.

Nobody rings a bell at the bottom. The investors who are present for the recovery are the ones who didn't leave during the decline.
— Worthune Decision Framework

You've considered moving investments to cash ahead of a perceived market decline
You've delayed investing because the market 'seemed high' or conditions 'seemed uncertain'
You've exited investments during a downturn and waited to reinvest at a lower entry point

About This FinBook

Missing the ten best market days in a 20-year period cuts returns by 50%. The evidence for staying invested through declines is overwhelming — here's how to act on it.

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