SMART MONEY: Things Move Fast

By Brad Brain

Some people suffer from the delusion that they can time the markets. They mistakenly think that they can nimbly move in and out. Investing at precisely the right time to capitalize on imminent future gains. Then they can gracefully exit in the nick of time, preserving their wealth in the face of imminent disaster.

It’s a nice fantasy.

The reality is that markets can move fast. Faster than you. Don’t feel bad. They are faster than me too.

Maybe you happen to get lucky once, but let’s not confuse luck for skill. Nobody on earth can reliably and repeatedly time the markets. Nobody.

Look no further than recent history for evidence that what I say is indisputably true.

Did you know that we saw one of the largest one-day market gains in history just this past month? On April 9, 2025, the Dow Jones Industrial Average gained 7.87% in just one day, following the announcement that Trump was going to delay his tariffs by 90 days.

Did you also know that we also saw one of the biggest one-day declines in history this past month? It was April 4, 2025, when the DJIA dropped 5.5% in a single day, this time due to the announcement of the implementation of these same tariffs.

So, this is how market timing plays out in real life. An investor, let’s call him Bob, gets nervous about the tariffs, or the federal election, or the market volatility, or maybe Bob just doesn’t like the weather forecast. Whatever the reason, Bob thinks he needs to wait it out for a bit. He thinks that he will get back in “once things calm down.” This is the way that Bob rationalizes his behaviour.

April 4 happens, the markets go through their big swoon – one of the biggest one-day declines in history - and our friend Bob sees this as a sure sign of confirmation of his prediction for the future. Bob feels compelled to sell his investments before they go down even more.

On April 7, Bob sells everything. With perfect (bad) timing. Bob sells all his investments just in time to miss out on a day of historic gains. The markets recover, but Bob doesn’t. He’s not in the markets anymore.

Here is the problem. On average the markets make roughly 10% per year. If you miss out on 7% in a single day, the remaining 364 days are going to be pretty skinny. This may seem like an oversimplification, but the research is clear. There have been many, many academic studies that show how harmful it is to miss out on even a few of the big daily gains that can come suddenly and without advance notice.

But here’s the irony. You don’t need to time the markets to do well.

There have been many more academic studies that have shown that not only are market timing strategies wildly unsuccessful – you are far more likely to harm yourself than help – there really is not much upside even if you do happen to get lucky once or twice.

Let’s look at three investors.

Mary is clairvoyant. She has the unnatural ability of perfect foresight and invests on the very best day of the year. That is, when prices are the lowest. That’s the best time to invest, when prices are cheap.

Then there is Susan. Susan just buys on her birthday every year, regardless of where the markets are trading.

Finally, there is Bob. Bob’s bad luck is not limited to April 7, 2025. Bob has the worst luck on buying when the markets are at their highest point of the year. That’s the worst time to buy, when prices are high.

You might think that Lucky Mary, who always gets the best prices, finishes miles ahead. But you would be wrong.

Of course, Mary does finish in first place. After all, she gets the absolute very best prices. But the difference between Lucky Mary, and Random Susan, and Bad Luck Bob is only a few percent per year in performance.

Its not timing the market that matters. It’s the length of time that you are in the markets that counts. This is the mantra to repeat to yourself the next time you are tempted by the fantasy of market timing.

Buckle in. Take the bad with the good. You don’t need to time the markets to have a successful outcome. All you need to do is to unleash the magic of compounding.

Its not timing. It’s time in.

Brad Brain. CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.