The Case for ‘Time In the Market’ Vs ‘Timing the Market’

Time in the market

March of 2020 was a scary time for the stock market, and well, life in general.  The Pandemic was in full ‘Freak People Out” mode and for most of the year it was still appropriate to wonder if disinfecting our groceries was a path to keep us virus free.

But, I loathe to give too much credit and validation to a virus which caused so much carnage in our lives.  And, since this post is about ‘Time in the Market’, I’ll refrain from discussing the pandemic again.

Not only was 2020 difficult from a personal standpoint, it too was from a financial one. The month of March alone was very unkind to our net worth, with the DOW having 4 days of 1000+ point drops. 

Here were the trading days in 2020 where the DOW dropped by more than 4%.  


The S&P had 4 days of a 3+% drop.


Both the S&P and the DOW converged on the the 20th of March and the 11th of June for a financial beatdown of epic proportion.  These days turned out to be the pinnacle of financial vexation.

Many people were left questioning; “Is the world coming to an end”, and “will I ever be able to retire”?  

But, thanks to a V-Shaped Recovery, the year didn’t turn out all that bad.  In fact, all major indices actually ended higher, in 2020.

The Dow Jones finished the year 1770.59 Points or 6.18% higher from January until December.  

The S&P 500 finished 487.37 Points or 15.02% higher from January until December.

Maybe it was the amount of liquidity thrust into the markets by the Federal Government.  Or, maybe it was just a bull market, with a “bear sighting” in the middle.  Either way, 2020 will be remembered for its share of negative circumstances.

Today, we’d welcome a 4% decline.  As of the writing of this post, the DOW is down 10.1% since January and we still have 40 trading days to either change course, or increase our losses. 

Unfortunately, according to BusinessInsider, 2023 doesn’t look all that promising either.  However, let’s put this into perspective, as I do like to offer a positive voice in the financial arena.

Your loss in 2020, just like your loss today; if somehow you were able to resist selling under this pressure, is a bit fat $0!

Sure, it may have looked ominous on paper, but not selling=not taking a loss.  Many of those companies who saw the biggest drops in market value in 2020 have since recovered.  Exxon Mobile (XOM) for example dropped 50% from January 2020 until October 2020, then completely changed course and headed higher ever since.

Here is why Time in the Market is the real winning strategy

Let’s Imagine for a moment, you sold all your positions on June 12th, 2020 which would be the day after the 4th 1000+ point DOW drop and the S&P’s 3.89% drop.  You’d had all you could stomach, and wanted to get out while you still had something to show for it.

Being in the ‘Monday Morning Quarterback” position now, gives us the luxury of evaluating what our ‘opportunity cost’ would have been by getting out of the market?  

Not only would you have sold your positions at lower prices than you could have just days prior to June 12th, but you may have missed out on dividend opportunities as well.  And, then to top it all off, the price likely came roaring back.

The purpose of this post is to convince you on the benefits of “Time in”’ the market, rather than trying to ‘Time’ the market.  Timing the market is fools folly, even professional traders with all their expensive software, discord groups, and paid research aren’t able to do it.   So why would you even try?

Looky here:

These are charts of an investment in Chevron Corporation (CVX), one of the Flagship Companies of the Dow 30.  

Both show an initial investment of $10,000 (purchasing 86.707 shares), on 11/2/2017.  

Suppose you owned CVX, and on June 12th, 2020 the day after the last big drop of the DOW, you decided you’d had enough, and sold your position. 

Here is what that chart would look like:


Time in the Market

You would have lost $1037.34, 10.37% of your initial investment.


If you had held strong and not sold, you would have increased your CVX holding by $9679.17, or 96.79%.


Time in the Market

Not to mention, your average price per share (cost) has since fallen from 115.33 to 92.59 because now you have 107.996 shares, instead of the original 86.707 shares you bought for $10,000.

The next 5 years of Time in the Market

In another 5 years you may have 25 more shares that you’ll acquire by reinvesting your dividends, which would then bring your average cost per share to $71.42.

After 10 years of owning CVX, armed with lots of Dividend DRIPS, you’d have a total of 140 shares (40 of which are free) and if shares are trading for a measly 10% higher than they are today, your overall value in CVX would be $27,489, on your $10,000 investment. 

Warren Buffett’s view of ‘Time in the Market’

And, I’ll leave you with words of wisdom from the Oracle of Omaha, who by the way, has had a positive impact on my investing philosophy, and likely yours as well:


If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.


He’s right, as you can see, the math doesn’t lie.  Time in the market when coupled with the compounding of dividends, is without a shadow of a doubt the best path to prosperity for those interested in equity investing. 

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