Focusing on What You Can Control: Time in the Market, Not Market Timing

Today, we're tackling the age-old debate of market timing versus time in the market – and why we firmly believe in the latter.

Market timing involves trying to predict short-term fluctuations in stock prices and making buy or sell decisions accordingly. While it may seem tempting to jump in and out of the market to capture gains or avoid losses, research consistently shows that timing the market is incredibly difficult, if not impossible, to do consistently.

We advocate for a different approach: time in the market. By staying invested over the long term and riding out market volatility, investors can capture the full potential of equity returns while minimizing the impact of short-term noise.

This doesn't mean we advocate for a set-it-and-forget-it approach. Regular portfolio reviews and adjustments are essential to ensure alignment with our clients' goals and risk tolerance. However, we emphasize the importance of maintaining a disciplined investment strategy focused on the long term.

The Dalbar study, conducted by the nation’s leading financial services market research firm, highlights the data that affirms our mentality. This annual analysis conducted by the Dalbar Inc, consistently highlights the behavior gap between investor returns, and the returns of the investments they own, which are largely caused by emotional reactions to market fluctuations. This study, such as the 2022 analysis highlighted below, often finds that investors tend to underperform the market due to factors such as poor timing, frequent trading, and emotional decision-making.

Working with a financial advisor can help to minimize emotional reactions to short term market fluctuations, and keep you on track to reach your long term goals. Contact our team through the button below to see how we can help you, and remember - time in the market, not market timing.