Stock Market Timing Mistakes That Investors Can't Afford to Make | The Informed Investor 49

Episode 49: Why is market timing so alluring for so many investors?

Probably because a perfect timing strategy—assuming it's out there and it works—promises huge rewards. In theory.

But there's a huge caveat.

A perfect timing strategy would have required perfect foresight—correctly predicting when stocks will rise or fall.

That's a tall order when you consider that most professional forecasters miss the mark. https://www.dimensional.com/us-en/insights/reality-check-capital-market-assumptions-vs-actual-returns

While perfect foresight isn't necessarily required for all other market-timing strategies, evidence to support their effectiveness is limited.

Fortunately, there is one timing strategy that tends to reward most investors who stick with it, and it's probably the easiest to implement: simply holding a diversified portfolio for the long run.

From 1926 to 2025, the S&P 500, a broad market proxy, delivered positive returns in almost 75% of calendar years while gaining an annualized 10.5% in that 100-year span. (S&P data © 2026 S&P Dow Jones Indices LLC, a division of S&P Global. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.)

In Episode 49 of The Informed Investor, Dimensional's Mark Gochnour, Head of Global Client Services, Katie Hendrix, Asset Allocation Research Director, and Jake DeKinder, Head of Client Communications, examine both the psychological attraction of market timing and the data for and against it.

LINKS FROM TODAY'S EPISODE: 

Subscribe to the Stay Calm Investing Newsletter https://www.staycalminvesting.com/newsletter

The Informed Investor: Feedback Survey https://www.dimensional.com/us-en/informed-investor-survey

"The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90

Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts

Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/

Kaitlin Hendrix on LinkedIn https://www.linkedin.com/in/katie-hendrix-57a30226/

Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-d-4105b98/

Learn more at https://www.dimensional.com/

For US audiences: Select videos are available as part of an opportunity for CFP® and Investments & Wealth Institute® professionals to earn continuing education (CE) credits. https://www.dimensional.com/us-en/financial-professionals/ce-credit-experience-d360