The Cost of Trying to Time the Stock Market: Why Patience Truly Pays Off
/By Shelley Murasko
We’ve all been there. Watching the markets rise and fall can feel like riding a roller coaster with a blindfold on: thrilling, but utterly nerve-wracking. And when that stomach-drop moment hits, the temptation to jump off and try to time the market—to sell just before the plunge or buy right before the next big rally—can be downright irresistible.
But here’s the reality check: Trying to time the stock market is like trying to catch a speeding train—you’ll probably miss, and you might get hurt in the process. Warren Buffett, often hailed as the greatest investor of all time, put it bluntly: "The only value of stock forecasters is to make fortune-tellers look good."
“Think You Can Time the Market? Here’s What It Could Cost You”
Let’s look at some numbers to bring this home. Imagine you invested $1,000 in the Russell 3000 Index back in 1999. Fast forward to 2023, and that investment would have grown to a healthy $6,449. That’s a sweet reward for sticking with it through two decades of ups and downs.
Now, here’s where it gets interesting. What if you had missed just the best week of returns over those 24 years? Your $1,000 would have grown to just $5,382. Had you missed the best month, you would have had only $5,150. Miss the best three months, and the number would have dropped to $4,546. And if you had missed the best six months? Well, then your $1,000 would have turned into only $4,185.
Russell 3000 Index Total Return, 1999-2023
Missing The Best Consecutive Days Can Cost You
Let that sink in for a moment. Missing out on just a handful of stellar days, which are often impossible to predict, could cost you nearly half of your long-term gains. It’s like skipping the opening minutes of a movie because you thought the plot wouldn’t start yet, only to realize later you missed the twist that made everything else make sense. You showed up, but a great deal of the magic had already happened.
The lesson here is simple, though often hard to follow when emotions run high: staying invested through thick and thin allows you to capture the full buffet the market has to offer. The market’s best days tend to sneak in right alongside its worst, and only those who stay seated at the table get to enjoy the feast.
Focus on What You Can Control
I understand the frustration that comes with watching stocks go down. Seeing those sharp drops in the market can feel like a gut punch. But instead of trying to predict the next twist, focus on what you can control: your long-term strategy, your risk tolerance, and your financial goals.
Maintaining an emergency fund and keeping a healthy portion of your near-term cash flow needs in less volatile investments—like money market funds, U.S. Treasury bonds, or highly rated corporate bonds—can also help you stay patient when the markets are turbulent.
Patience Pays Off
So, next time you feel like pulling the plug and trying to time the market, remember this: patience isn’t just a virtue—it’s the most powerful investment tool in your toolbox. And if you’re ever tempted to jump off the roller coaster, just remind yourself that those unexpected turns often lead to the best views.
Stay invested, stay curious, and let time do the heavy lifting. Navigating the stock market ups and downs isn’t easy. Just remember: we’re here to help keep you grounded during uncertain times.
Past performance is no guarantee of future results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Investing involves risks. Wealthrise Financial Planning is an investment advisor registered with FINRA. This material is provided for informational and educational purposes only. It should not be considered investment advice or an offer to buy or sell securities.
