In early April 2025, the S&P 500 dropped nearly 5% in its biggest one-day tumble since June 2020. Tariff fears, recession headlines, panic selling — every signal screamed that the market was about to fall further.
Lots of people sold. They thought they were being smart and protecting themselves. Cutting losses. I almost succumbed myself, but I didn’t.
Then on April 9, 2025, the S&P 500 jumped about 9.5% in a single trading session — its biggest one-day gain in years. I didn’t see that coming at all.
Investors who’d bailed in early April missed it. Those who held on saw the index finish 2025 up 17.88%. Missing just that one day would have cut your full-year return by more than half.
That’s market timing in a nutshell. The worst days and the best days happen right next to each other, and almost nobody catches the bottom right.
I’ve been writing about money for over 40 years and investing for over 45. I watched smart people panic-sell in 1987, 2001, 2008, 2020, 2022, and again in 2025. Many of them never made the money back.
Here are seven brutal truths about trying to time the stock market — and why even the smartest investors almost always lose this game.
1. Missing just 30 days over 30 years cuts your return by 75%
This is the math that should end the market timing debate forever.
According to a Wells Fargo Investment Institute analysis of S&P 500 returns from July 1995 to June 2025, an investor who stayed fully invested for the entire 30-year period earned an average of 8.4% per year.
The investor who missed just the 30 best days during that stretch? They earned an average of 2.1% per year, less than inflation.
Miss the best 40 days, and your return drops to nearly zero. Miss the best 50, and you actually lose money over 30 years.
There are about 7,500 trading days in 30 years. We’re talking about missing roughly 0.4% of them — and watching three-quarters of your potential gains vanish.
2. The best days happen during the worst times
This is the cruelest part of market timing.
Per Hartford Funds’ 2026 research using Morningstar data, 76% of the stock market’s best days have occurred during bear markets or the first two months of a new bull market.
In plain English: The biggest single-day rallies happen exactly when everyone is convinced the market is broken. Here are a few examples:
- October 13, 2008: The S&P jumped 11.6% in one day in the middle of the worst financial crisis since the Depression.
- March 24, 2020: The S&P jumped 9.4% in one day after the COVID crash.
- April 9, 2025: The S&P jumped about 9.5% in one day in the middle of the tariff panic.
The investors who sold to “wait for things to calm down” missed all three.
3. The ‘behavior gap’ costs investors 15% of their returns
Most investors don’t earn what their own funds earn.
Morningstar’s 2025 Mind the Gap report — which tracks over 25,000 U.S. open-end funds and exchange-traded funds — found that over the decade ending December 31, 2024, the average dollar invested earned about 7% per year. The funds themselves earned roughly 8.2%.
That 1.2 percentage-point gap doesn’t sound like much. But it equals roughly 15% of total returns over a decade — gone to bad timing.
It’s not the funds underperforming. It’s the investors. People buy after rallies and sell after drops, year after year, decade after decade. The fund stays the same. The investor undermines themselves. If you want to know whether you’re at risk, our list of 7 signs you’re panicking over market declines is worth a careful read.
4. The average investor leaves half their potential return on the table
Research firm Dalbar has been measuring investor behavior since 1994. Its 2025 study found that for the year ending December 2024, the average equity fund investor earned 16.54%. The S&P 500 returned 25.02% over the same period.
That’s an 8.48 percentage-point gap — the second largest in a decade.
Now compound that. Over 20 years, $100,000 invested in the S&P 500 grew to roughly $717,000. The same $100,000 in the hands of the “average” investor — making average timing decisions — finished at just $345,000.
More than half of the return, gone — not to the market, but to the investor’s own decisions.
Quick gut-check — if your money advice is coming from random online influencers, you’re playing a dangerous game. I’ve been a CPA since 1980 and writing about money since before the internet existed. Sign up for the free Money Talks Newsletter and get expert advice that’s been tested by time.
5. Even the pros — with PhDs and supercomputers — can’t do it consistently
If market timing worked, it would be the easiest way to get rich on Earth.
It doesn’t. The vast majority of actively managed mutual funds — run by full-time professionals with Bloomberg terminals, research teams, and PhDs in finance — fail to beat their benchmark indexes over 15-year periods. The longer the time frame, the worse they look.
If the smartest, best-resourced minds in finance can’t reliably time the market, the idea that you’ll do it on your phone between meetings should make you laugh.
Yet every market panic, millions of retail investors decide they can outsmart the system. They can’t. The data is staggeringly consistent on this point.
6. To win at market timing, you have to be right twice — not once
This is the truth almost nobody thinks about clearly.
To successfully time the market, you don’t make one decision. You make two. You have to know when to get out — and you have to know when to get back in.
People focus on the first half. They congratulate themselves for selling before a crash. What they almost never do is buy back in at the bottom.
They wait for “confirmation.” They wait until things “calm down.” By the time they’re comfortable buying again, the market has already recovered 30%, and they’ve locked in a worse position than if they’d done nothing.
I’ve seen this play out hundreds of times in 40 years. The people who panic-sold in March 2009 didn’t buy back in 2010. They bought back in 2014, after the market had already doubled.
The people who sold in March 2020 didn’t buy back in April. They bought in 2022, after the recovery had played out. You’ll likely be wrong on both ends. That’s how this works.
7. The opportunity cost of waiting for a better entry point is enormous
Every day money sits in cash while you’re waiting for the right moment, it’s not compounding in the stock market.
Historically, the U.S. stock market has gone up roughly three out of every four years. Not every year, but most. So when you decide to wait on the sidelines for a clearer signal, you’re betting against the math — and the math wins the majority of the time.
Even worse: Cash isn’t free of risk. With inflation running at 3% or higher, cash is guaranteed to lose purchasing power every year you hold it. The “safe” choice is the riskiest one over a long enough horizon.
The best entry point isn’t tomorrow. It isn’t after the next correction. It was 10 years ago. The second-best is today.
How to invest without trying to time anything
The strategy that beats nearly all market timers requires almost no decisions.
- Dollar-cost average into index funds. Pick a low-cost S&P 500 or total stock market index fund. Set automatic monthly contributions. Done. Here’s why index funds work.
- Automate everything. Set the contribution to come out the same day your paycheck lands. If it’s automatic, it doesn’t compete with willpower or news headlines.
- Never check daily prices. The shorter the time frame you track, the more emotional you’ll be. Once a quarter is plenty.
- Have a written plan — and reread it during panic. Put together a one-page plan with your target allocation, your contribution amount, and a single sentence: “I will not sell during a downturn.” Tape it to your monitor.
- Use target-date funds if you don’t want to think about it. They automatically rebalance and shift to bonds as you near retirement. Set, forget, retire.
- Keep six to 12 months of expenses in cash. This is the single best inoculation against panic-selling. If you never have to sell stocks during a crash, you can’t be forced into a timing mistake. Learn 5 moves to make if you’re worried about a crash.
- Rebalance once a year, max. Pick a date — your birthday, January 1, whatever — and on that one day, bring your allocation back to target. The rest of the year, leave it alone.
For more on this approach, our piece on Bogle-style wealth building lays out the system in detail.
Bottom line
The single best investing decision most people ever make is “do nothing.”
The second best is “keep buying through the panic.”
Wall Street wants you to trade. Brokerages make money on transactions. Financial news depends on volatility to fill airtime. Influencers profit on followers chasing the next pump. Almost the entire financial media ecosystem is built on the assumption that you should be making moves.
You shouldn’t.
The investor who stayed in the S&P 500 from January 1, 1995 through December 31, 2024 — and did absolutely nothing else — beat roughly 90% of every active fund manager, day trader, market timer, and stock picker who tried to outsmart the market over that span.
That’s the entire game. Buy the index. Keep buying. Don’t sell. Live your life.
For more, see our deep-dive on how trying to time the market destroys your wealth and 14 strategies for building long-term wealth.
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