By James Haynie

April 2026

It’s an all-too-common story: Investors think they can time the market and decide to sell when things look dicey. It happened at the start of last year, when tariff fears roiled the markets and U.S. stocks lost 19% of their value in less than three weeks. It occurred in 2022, when rising inflation drove the Fed to begin hiking rates, which sent the S&P 500 down more than 25%. It happened at the start of the global pandemic, when the broad market lost more than a third of its value amid fears of the COVID-induced economic shutdowns.

The truth is, investors can rarely predict the best time to exit stocks, as recent market sell-offs show. In fact, we believe you are far better off remaining disciplined and staying invested in the markets through good times and bad.

However, in each of those instances, the market recovered just as investors were beginning to lose faith.

• Shortly after the Covid sell-off, the markets rebounded sharply, rising nearly 70% from March 23 through the end of 2020.
• After the S&P 500 slipped into a bear market on inflation rate-hike fears, the market reversed course and gained more than 33% from October 2022 through the end of 2023.
• And within days of President Trump’s imposing across-the-board tariffs on major trading partners in early April 2025, stocks began to rebound and gained more than 37% from April 8 through the end of last year.

Investors who panicked and bailed on stocks in each of these scenarios were proven wrong as they wound up locking in paper losses and then missed out on strong rebounds as fears subsided and conditions improved.

The truth is, investors can rarely predict the best time to exit stocks, as recent market sell-offs show. In fact, we believe you are far better off remaining disciplined and staying invested in the markets through good times and bad. Why?

Market Timing Requires Being Right Multiple Times

Even if by sheer luck investors manage to get out of the market just as a storm is approaching, there’s an equally difficult challenge, which is knowing when it’s time to jump back into the market once circumstances start to improve.

Recent history shows that this can be just as tricky and costly. In early 2009, consumer confidence had fallen to its lowest level in roughly 30 years amid the mortgage crisis, the unemployment rate was approaching double digits, and the global financial system still appeared to be on shaky footing. Yet amid all that bad news, a new bull market was born on March 9, 2009. If you had $10,000 in the stock market that day, your money would have grown to nearly $56,000 by the end of May 2020. But if you mis-timed the market and waited until the end of 2009 when it felt safer to get back into equities, your $10,000 would have grown, but to a more-modest $33,400 by the end of May 2020.

Market Timing is Very Difficult

There are a number of reasons why it’s difficult to time the market. One is rooted in the uncertainty of the future. The stock market is a forward-looking indicator, meaning equities trade not on what’s happening now, but on trends and developments that are likely to take place six to nine months down the road.

For example, in May 2019, were you anticipating that a global pandemic would cause a stock market crash in late February 2020? And even if you were, could you have guessed the cause of the downturn would be a complete shutdown of parts of the economy to enforce social distancing requirements?

It Pays Not to Time the Markets

What’s the harm in at least trying to avoid losses by trading in and out of the market? Potentially, it could be tens of thousands of dollars of gains, if not more. Over the past 20 years, the average fund investor has earned just 9.2% annually in their stock funds, thanks largely to market-timing errors, according to the financial consulting firm Dalbar.¹ By comparison, the S&P 500 index has risen 10.4% a year during this time.

That difference may not seem significant but consider this: If the average investor contributed $10,000 a year into an equity fund, that money would have grown to $523,000 based on a 9.2% annual return over 20 years. By contrast, had the investor earned the full 10.4% of the market’s annual returns by not mis-timing the market, their annual contributions would have grown to $600,000.

Market Timing Leads to Missed Opportunities

Part of the problem of trying to time the market, and being wrong, is that missing even a handful of days can make a surprisingly big difference in your portfolio’s performance over many years. For example, since July 1995, the S&P 500 has gained 8.4% annually. Yet if you missed just the 10 best trading days since then, your annual returns would have been reduced to 5.6%, according to Bloomberg and the Wells Fargo Investment Institute. If you missed the 20 best trading days, your returns would have sunk to 3.7%.² In other words, the “cost” of mistiming the market is exposing yourself to stock market risks but only earning bond-like returns.

This doesn’t even reflect the other unintended consequences of trading in and out of your investments, such as trading costs and the higher capital gains taxes you’ll incur by being a short-term investor. On their own, tax inefficiency and trading costs can easily shave a percentage point or more off your potential annual returns. But factor that in on top of lower investment performance due to market timing errors, and you can set your long-term strategy back.

This is yet another reason why Adams Funds believes that it is in the investor’s best interest to #Stay Invested over the long run. This is rooted in our 96-plus year history of managing money through both good times and bad. To learn more about strategies that will help you stay disciplined even in the most challenging market, visit Adamsfunds.com/stayinvested.

¹ “Dalbar QAIB 2025: Investors are Still Their Own Worst Enemies,” IFA.com. May 2025.

² “The Perils of Trying to Time Volatile Markets,” Wells Fargo Investment Institute. July 28, 2025.