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Time in the Market versus Market Timing

Time in the Market versus Market Timing

February 16, 2023

Time in the Market vs. Timing the Market

Missing Out on the Market’s Best Days

There is a common misconception among investors that the best way to build wealth is to perfectly time the market. However, successfully identifying the most profitable times to sell or buy requires an incredible amount of luck. By trying to wait out market volatility, you may actually end up missing the market’s biggest gains. Not being invested during the market’s best days can have a significant impact on the value of your portfolio, as illustrated by the chart below.

Hypothetical Returns of a $10,000 Investment in the S&P 500 Index

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Missing The Market’s Best Days

A portfolio of $10K invested in the S&P 500 on January 1, 1980, would have been worth $1,060,000 on June 30, 2022.
By missing the 50 best days of performance, the same investment would only be worth $75,568 sacrificing $984,432 in earnings

Avoid Rash Decisions

Some investors choose to pull their money out of the market during a downturn and wait until prices improve to buy back in, only to miss out on the upswing. Markets can rebound quickly, so even if investors are only out of the market for a few days, they can miss out on huge gains.

Focus on the Long-Term

The stock market has been very resilient throughout its history. Stocks have routinely recovered from short-term downturns to move higher over longer time horizons.

Trying to time the market can have a significant opportunity cost. Work with your financial advisor to develop a long-term investment strategy designed to help you achieve your financial goals.


Past performance is not a guarantee of future results. Investing in stock involves risks, including the loss of principal. The hypothetical example assumes an investment that tracks the price returns of
a S&P 500® Index but does not reflect dividend reinvestment and the impact of taxes, which would change these figures. The “Best Days” were determined by ranking the one-day price returns for
the S&P 500 Index within the stated time period. There is volatility in the market and a sale at any point in time could result in a gain or loss. Indexes are unmanaged, and performance of the indexes
includes reinvestment of dividends and interest income, unless otherwise noted. It is not possible to invest directly in an index. Source: Factset, as of 9/30/2022.
Kestra Investment Management LLC (“Kestra IM”) is an SEC registered investment adviser. Kestra IM provides market commentary, research, model management, and other investment advice to its
affiliated broker-dealers and registered investment advisers. For more information about Kestra IM, please reference the Kestra IM Form ADV disclosure brochure and the disclosure brochure for the
registered investment adviser your advisor is registered with.


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