Timing the Market, or time IN the markets?
Key Takeaways from Timing the Market:
1. Missing just one day off the bottom can reduce returns by nearly 10%
2. Sharp market recoveries are more common than most investors think
3. Active managers often tend to underperform benchmarks over time
4. Align assets with liabilities to withstand market volatility
Timing the Market, or time IN the markets? – Links
Catch all our Mullooly Asset videos here
Subscribe to the Mullooly Asset YouTube Channel
Watch this episode (“Timing The Market, or time IN the markets”) on our YouTube Channel
Link to Ritholtz Wealth report from Callie Cox
Link to SPIVA (referenced in video)
Timing the Market, or time IN the markets? – Transcript
Timing The Market
Today we’re going to talk about timing the market. This is a concept we talk about a lot with clients.
And it’s one of those things that it’s easier to see it visually represented than it is to hear about it, or read about it in words.
We’re recording this in September of 2025, and it’s easy to forget how this year has gone so far.
We just are going to take a look at two charts from the Ritholtz Wealth Management crew.
They shared these out in a recent newsletter, which we’ll link up to.
The first chart we’re going to look at shows what your returns would be, would look like, if you missed the first day off the bottom, this year.
If you remember back in the spring, in late March, early April, around the tariff announcements, there were some pretty sharp drops in the market. And then there was a pretty sharp move off of the bottom, which we’re looking at here in this chart.
This is what… if you panic sold and then missed the first day off the bottom. Which in this case was April 9th.
The difference is just under 10%. So the chart looks at, going into the year, and then, from the bottom.
The light blue line is if you just stayed fully invested the entire time.
And the dark blue line is if you missed just that first day, just April 9th.
This is using the S & P 500 as an example. So your individual portfolio and, and your return numbers will obviously look different than that, depending on how you’re invested.
But the move that day was so sharp off the bottom, that the likelihood of being out of the market and then jumping back in on that day, on that afternoon, depending on what time you did that, your returns may vary.
The likelihood of that happening is extremely low.
It’s another thing we often say is the best and worst days in the markets are usually (they happen) in the same time periods. They happen one after another. And this year in 2025, we lived through that reality.
And we can see how big of an impact just missing one day has on returns moving forward.
Okay. So maybe you’re saying, “well, you know… moves off the bottom don’t usually happen that way. This time was different. This was a unique move, um, because of the tariff announcement, and the pause that was announced. It usually doesn’t happen in a ‘V’ like this.”
So we’re going to look at the next chart, which shows the average 12 months before and after market bottoms, going back to 1950.
There were 11 of these instances, or 11 bear markets (20% drops), going back to 1950.
The light blue line is the average of those 11 drops.
The dark blue line is how it played out in 2025.
So as you can see, the V-shape recovery here in 2025 is not too far off from how it usually plays out. The “moves off the bottom are sharp – more times than not,” to pull a nugget from the newsletter.
This is quoting Callie Cox, who is the Chief Economist at Ritholtz.
The first month, after the last 10 market bottoms has accounted for an average of 21% of the entire ensuing bear market.
(Meaning) if you miss the first month after the bottom, you’ve missed one fifth of the entire move.
One fifth – just by missing the first month.
So these moves happen… they happen quickly.
I don’t bring these numbers up to, you know, take any sort of victory lap.
Or to say that, you know, there’s (only) one way to invest.
There’s a million different ways to invest.
But it’s really difficult timing the market successfully once; let alone on a repeatable basis.
We often share numbers from SPIVA, who studies how active managers compare versus their benchmarks.
Over the last year, ending June 30th, 2025, 73% of active managers underperformed their benchmark.
So about three quarters of active managers. These are professional money managers, underperform their benchmark, in this case it’s large cap managers; the S&P 500 is their benchmark.
So three quarters of professionals underperform.
Over five years, that number is 87% underperform.
For 15 years, 88% underperform.
And these are professionals again. So whether that’s due to timing decisions, or what they own, or how much of what they own, it’s really hard to beat the benchmarks.
Year after year, we found that people trying to timing the market often comes from a “mismatch of time horizons.”
And what I mean by that is people put short term dollars at risk into longer term instruments or investments, like stocks.
That’s why we believe so strongly in matching assets and liabilities when we construct your portfolios.
To do that, we have to make sure that the whole balance sheet makes sense before recommend recommending an allocation.
That means, having enough cash at the bank, and taking an appropriate amount of risk between stocks and bonds.
The allocations we do recommend are built to withstand moves in the market where we have years of needs or years of liabilities in shorter term fixed income type instruments.
So it doesn’t have to… it’s not exposed to the fluctuations of the stock market.
Just two visual representations here of how difficult it is timing the market.
And the perils of trying to do so.
Thank you for watching “Timing the market, or time IN the market”
