Why Patience Beats Perfection: The Long-Term Investor's Guide to Market Timing
Over the course of your investing life, you’ll encounter market lows and highs. Headlines often spotlight the extremes, especially when markets reach record levels. Take, for example: “Stocks Hit Record Highs. What’s Behind the Rally.”1
All-time highs have an interesting effect on investor behavior and psychology.
Many investors can feel a nagging voice that whispers "wait for a better entry point" when markets are climbing. It's human nature to want to buy low and sell high, but decades of market data reveal a counterintuitive truth: waiting for the "perfect" moment often costs more than it saves.
The Myth of Market Timing
Many investors hesitate to invest when markets hit new records. After all, who wants to be the person who bought at the peak? But this thinking overlooks an important fact: market highs aren't rare events. They're regular milestones.
Since 1950, the S&P 500 has reached over 1,250 all-time highs—roughly 16 new records per year on average.2 If investors avoided the market every time it hit a new peak, they'd spend most of their time on the sidelines while missing potential growth opportunities.
What History Teaches Us About "Bad" Timing
Some investors instinctively worry that investing after a market high is a form of bad timing, like stepping in just before the drop. But while it’s impossible to know how the market will behave in the short term, history can offer helpful context for those concerns.
When the S&P 500 reached a new all-time high in January 2024—its first in more than two years—it marked a notable rebound following the 2022 market decline. To understand what similar moments have looked like in the past, one analysis looked at 13 instances between 1958 and the present where the market hit a new high after at least a year of lower prices.3
What the data shows:
- One year after those highs, the S&P 500 was positive in 12 out of 13 cases, with an average gain of 15.3%.
- Two years out, stocks were higher in 11 of the 13 cases, with an average return of 23%.
These outcomes don’t guarantee what will happen next, but they suggest that reaching a new high hasn’t historically been a signal to avoid the market. In fact, periods that followed these kinds of milestones have often delivered returns that reflect the broader trend of long-term market growth.
The Cost of Waiting
Consider this analogy: waiting to invest because prices are high is like waiting to fill your gas tank until prices drop. You might save a few dollars, but you risk making your journey longer and more complicated than necessary.
The opportunity cost of staying in cash while markets climb can potentially exceed any benefits of timing your entry perfectly. Markets don't send advance warning before they fall or rise, and investors who wait for significant pullbacks often find themselves chasing performance instead of participating in it.
Building a Patient Investment Strategy
Successful long-term investing isn't about predicting market movements, it's about staying invested through all kinds of market cycles.
Here are a few principles worth keeping in mind:
Consistency over timing. Investing regularly, even during periods of uncertainty, can help reduce the emotional pressure of trying to pick the “perfect” moment.
Your timeline shapes your perspective. The longer your time horizon, the less any single market entry point tends to influence long-term outcomes.
Diversification spreads exposure. A mix of assets doesn't eliminate risk, but it can help manage it by reducing reliance on any one investment or market movement.
Ignoring Timing Temptations
Market timing feels logical, but it's notoriously difficult to execute successfully. History shows us that staying invested, even when markets seem expensive, has been a more reliable path to long-term wealth building than trying to outsmart the market.
Rather than waiting for the perfect moment that may never come, focus on time in the market over timing the market. Your future self will likely thank you for choosing patience over perfection.
Remember: this information is for educational purposes only and shouldn't replace personalized financial advice. Consider consulting with a financial professional to discuss your specific investment strategy.
Sources:
- Barron’s, 2025 [URL: https://www.barrons.com/articles/stock-market-hits-record-highs-tax-bill-jobs-6f818d48]
- Bloomberg, RBC GAM, 2024 [URL: https://www.rbcgam.com/en/ca/learn-plan/investment-basics/investing-at-all-time-highs/detail]
- Forbes, 2024 [URL: https://www.forbes.com/sites/wesmoss/2024/01/31/what-an-sp-500-all-time-high-could-mean-for-your-investments/]
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2025 Advisor Websites.
