After being in the investment industry for almost 24 years, one of the most important lessons I have learned is that it is virtually impossible to consistently time the market. 

The act of market timing involves the moving of money in and out of the financial market or between different investments as you try to anticipate the Market’s behavior. Attempting to predict market performance is not only risky, but very difficult to carry out on a consistent basis.  By trying to time the market, you may lose out on being invested during the best stock market days, which can lead to dramatic underperformance in the long run.  As this chart demonstrates, the best stock market days usually come when we least expect it. The best days happen during market turmoil and periods of heightened market volatility. In missing the best days in the market, an investor risks losing out on meaningful return appreciation in the long term. 

This article explores the potential downsides of this strategy.

Shane Dubin is an Investment Advisor with CIBC Wood Gundy in Toronto. The views of Shane Dubin do not necessarily reflect those of CIBC World Markets Inc. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors. This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change.