Should I try to time the market?
In one paragraph
No — decades of data show that missing the 10 best days of market returns in any given decade wipes out most of the long-run gains, and those best days cluster directly after the worst days, when investors who timed out are most likely to still be sitting in cash.
What this actually means
Market timing — moving to cash when you think a decline is coming and reinvesting when you think the bottom has passed — sounds logical. In practice, it requires being right twice (when to exit and when to re-enter) and the cost of being wrong even once is catastrophic.
The numbers are well-documented. A hypothetical $10,000 invested in the S&P 500 from 2003 to 2022 grew to roughly $64,000 if fully invested throughout. Miss the 10 best trading days and that drops to $29,000. Miss the 20 best days and it falls to $18,000. The market's best days are almost always preceded by its worst days — the investors most likely to miss the recovery are those who fled during the drawdown.
Morgan Housel's The Psychology of Money addresses this directly: volatility is the price of admission for equity returns. The investor who earns market returns is not the most sophisticated one — it's the one who stays invested when everyone else is panicking. Treating volatility as information to act on, rather than as the inevitable texture of long-term investing, is the primary behavioral failure that destroys returns.
Tony Robbins covers similar ground in Unshakeable, which opens with the statistics on missing best-day returns and uses them to argue for permanent, automated equity exposure through index funds.
JL Collins in The Simple Path to Wealth is bluntest: nobody knows when the market will rise or fall, including the professionals whose job it is to know. The only reliable strategy is to own the market, stay in the market, and let compounding do the work.
The practical alternative to market timing is rebalancing — maintaining a target allocation and adjusting periodically, which systematically buys more of what has declined and less of what has risen, without requiring any prediction about market direction.
