Falling markets and drastic headlines can tempt individuals to abandon their long-term investing plans. Their thinking might go something like, let’s wait until it’s over, hoping to catch the market at its lowest point before buying in. Or in rising markets, maybe they seek to sell most of their holdings near the peak. However, timing the market is essentially an impossible task, as the chart on this page illustrates. It’s good to remember:

  1. Headlines shouldn’t dictate when you invest; they may not reflect what’s actually happening in the market.
  2. A recovery typically involves many episodes of gains and losses that can obscure an overall upward trend.
  3. Just a few trading days can be responsible for the largest gains during a recovery; being out of the market can mean missing out on the most profitable periods.

Don’t rely on headlines for an all clear to invest.

Hypothetical $1 million investment in Standard & Poor’s 500 Index at pre-crisis peak, from market bottom in 2009 to breakeven in 2011.