Why Patience Beats Perfection: The Long-Term Investor's Guide to Market Timing
Why Waiting for the Perfect Market Entry Could Cost You More Than You Save
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. For example: *“Stocks Hit Record Highs. What’s Behind the Rally.”*¹
All-time highs have a fascinating effect on investor behavior and psychology. Many investors hear a quiet voice whispering, “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
Investors often 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—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, missing potential growth opportunities.
What History Teaches About “Bad” Timing
Some investors instinctively worry that investing after a market high is bad timing, like stepping in just before a drop. While short-term market movements are impossible to predict, historical data can offer helpful perspective.
For example, after the S&P 500 reached a new all-time high in January 2024—its first in over two years—an analysis of 13 similar instances since 1958 revealed:³
- 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 later, stocks were higher in 11 of the 13 cases, with an average return of 23%.
While past performance doesn’t guarantee future results, these milestones historically haven’t signaled a need to avoid the market. Periods following new highs often delivered returns aligned with long-term growth trends.
The Cost of Waiting
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.
The opportunity cost of staying in cash while markets climb can exceed any perceived benefit of perfect timing. Markets don’t announce their peaks or troughs in advance, and those waiting for a pullback often end up chasing performance rather than 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 market cycles. Consider these principles:
- Consistency over timing. Invest regularly, even during uncertainty, to reduce the stress of trying to pick the perfect moment.
- Time horizon matters. The longer you plan to invest, the less any single market entry point affects long-term outcomes.
- Diversification reduces risk. A balanced mix of assets doesn’t eliminate risk but helps protect against overreliance on any one investment or market movement.
Ignoring Timing Temptations
Market timing feels logical, but it’s notoriously difficult to execute successfully. History shows that staying invested—even when markets seem expensive—is a more reliable path to long-term wealth 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.
Disclaimer: This information is for educational purposes only and should not replace personalized financial advice. Consult a financial professional to discuss your specific investment strategy.
Sources:
- Barron’s, 2025 [https://www.barrons.com/articles/stock-market-hits-record-highs-tax-bill-jobs-6f818d48]
- Bloomberg, RBC GAM, 2024 [https://www.rbcgam.com/en/ca/learn-plan/investment-basics/investing-at-all-time-highs/detail]
- Forbes, 2024 [https://www.forbes.com/sites/wesmoss/2024/01/31/what-an-sp-500-all-time-high-could-mean-for-your-investments/]
