Does Time in the Market Beat Timing the Market? 4 Experts Weigh In.

To some, yesterday’s surprise market boom was a sign that this year’s bearish wave may be coming to an end. Indeed, the S&P 500, Nasdaq Composite and Dow Industrial Index enjoyed their strongest trading day in years on Wednesday, climbing roughly 3%. While the market has since reversed — wiping nearly all of those gains — for a moment, investors had held out hope. Now, this has sparked an age-old question: Does time in the market beat timing the market?

A photo of stock prices on a digital screen with a city street reflected in the glass and visible in the left side of the image.
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The idea is simple: if you know when the market will begin to reverse, you can buy into financial assets on the low and enjoy greater returns once they bounce back. In practice, however, this can be a lot like trying to find gold at the end of a rainbow.

As the saying goes, “Time in the market beats timing the market.” The fact is, the S&P 500 has never lost money over the long term. As such, most investors agree that continuously putting small chunks of money into the market ultimately yields better returns than waiting for a recession to bottom out.

That said, let’s see what the experts think about the matter.

Does Time in the Markets Beat Timing the Market?

According to Mint Asset Management analysts Marek Kyzeczkowski and Henry Morrison-Jones, timing the market is a “fool’s game.” Citing historical precedent, the analysts argue that “Turning points are never obvious.” Frequently, markets will price in bad news before it even happens. As such, even if the news suggests economic conditions will worsen, it’s possible the market has already hit its floor.

Joel Johnson, a Certified Financial Planner at Johnson Brunetti, feels similarly. According to Johnson, trying to hide money under your mattress when things appear uncertain can lead to lower long-term gains. Johnson argues that the best days in the market often come out of nowhere. So, missing the biggest upswings by trying to time the markets can dramatically hurt your performance.

Finally, Warren Buffett — the “Oracle of Omaha” himself —  is a shining example of the benefits of time in the market. According to Buffett, valuation will always trump market timing. At Berkshire Hathaway’s (NYSE:BRK-A, NYSE:BRK-B) annual shareholders meeting last week, the billionaire reiterated just how little his investments are based on market timing: “We haven’t the faintest idea what the stock market is gonna do when it opens on Monday — we never have.”

As a proponent of long-term growth strategies, Buffett is famous for researching companies’ fundamentals to steer his investing decisions. The investing legend notes, “I don’t think we’ve ever made a decision where either one of us has either said or been thinking: ‘We should buy or sell based on what the market is going to do […] Or, for that matter, what the economy is going to do.'”

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines


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