Time In, Not Timing

“The reality is, it’s time in the market, not timing the market.” –Keith Banks, Bank of America, Vice Chairman on CNBC


This quote should be the mantra for all investors. Going back to 1926, the average return on stocks is about 10% per year. The only way investors can get that return, though, is by being patient and staying invested for the long-term. Trying to get out of the market before things get bad and getting back in before things get good simply doesn’t work. Nobody in the history of investing has been able to do this on any consistent basis. You’d have to be able to predict the future in order to do this successfully.

The good news for investors is that you don’t need to be able to time the market. By staying disciplined and patient you can learn to harness the power of the market and reap the benefit of the historic generous long-term returns.

The chart below shows how often the market generates a positive return based on holding period.