Tempted to Time the Market? Look at These Charts First

When stocks plunge, it’s tempting to do something, anything, to regain control of your financial picture. But the odds are that jumping in and out of the market will only hurt your portfolio in the long run.

For investors watching the latest rout, which put the S&P 500 Index on track Tuesday for its lowest close since November 2020, it’s hard to sit back and watch money disappear. But plenty of research shows that it’s better to stay fully invested than attempt to time the market.

“Market timing is extraordinarily difficult, and lots of money in losses were locked in by those who went to cash in late March 2020, after the market dropped 34% — only to see it return to that level by July,” said Doug Bellfy, a financial planner with Synergy Financial Planning.

Here are a few charts from leading investment firms that back up the argument against timing the market.

Vanguard: Focus on the Long Run

Sharp downturns in global stock markets are painful, but aren’t really uncommon. Vanguard Group created a chart to show that while some bear markets since 1980 have been deep, many of the recoveries that followed were even greater, and longer.