Trying to “Buy the Dip”? These S&P 500 Numbers Tell a Different Story

Have you ever thought: “The market is overheated, I’ll step aside and buy back cheaper”? Or: “I’ll wait for a correction and buy at the bottom”?

It sounds reasonable. Logical, even.

The problem? Decades of market data show that this instinct is one of the fastest ways to destroy long-term investment returns.

The Numbers That Wake Investors Up

A long-term study of the S&P 500 over the past 30 years reveals an uncomfortable truth:

• Stayed invested for all ~7,500 trading days: average annual return of 9.8%
• Missed the 10 best days (just 0.13% of the time): return drops to 5.6%
• Missed 20 best days: returns fall to 2.0%
• Missed 30 best days: returns turn negative at -0.4%

Missing a handful of days over three decades is enough to wipe out most — or all — of your long-term gains.

The Hidden Trap of Market Timing

Here’s the cruel irony: the strongest market rallies often occur immediately after the worst sell-offs.

These days are:

• Highly concentrated
• Emotionally uncomfortable
• Nearly impossible to predict in advance

Investors who step aside during market stress often miss the exact moments when long-term returns are made.

Why Market Timing Almost Never Works

1. You Can’t Predict the Best Days

No indicator, no model, no analyst consistently predicts when the market will jump 5–8% in a single session. These moves usually happen on unexpected news — policy shifts, liquidity changes, or sudden sentiment reversals.

2. Timing Requires Two Perfect Decisions

To succeed, you must:

• Sell before the decline
• Buy back before the rebound

Getting just one of these wrong can permanently damage returns.

3. Emotions Work Against You

When markets fall, fear says: “Get out.” When markets rise, greed says: “Wait — it’ll go higher.”

Most investors exit too late and re-enter too late. Almost every time.

Time in the Market Beats Timing the Market

Over the past 30 years, the S&P 500 delivered an average annual return of 9.8%.

Miss just 10 of the best days — out of 7,500 — and that drops to 5.6%. That’s a 43% reduction in annualised performance.

Now look at the long-term impact:

• $1 million invested in 1995, fully invested: ≈ $14.8 million by 2025
• Missed the 10 best days: ≈ $5.2 million

$9.6 million lost — not because of bad assets, but because of trying to outsmart the market.

What Works Better Than Market Timing

1. Buy and Hold

Long-term buy-and-hold strategies outperform active trading in roughly 85% of historical periods. Compounding works best when left uninterrupted.

2. Invest Regularly

Dollar-cost averaging — investing a fixed amount on a set schedule — removes emotion from the process. You buy more when prices are low and less when prices are high, smoothing entry over time.

3. Ignore the Noise

Headlines, forecasts, and short-term market drama create emotional pressure but add little value. Business fundamentals and long-term growth drive returns — not daily news cycles.

Market timing is an illusion of control. Time in the market is the reality of returns.

It’s better to be invested 100% of the time with a 9–10% long-term return than to constantly jump in and out and settle for 2% — or worse.

The market doesn’t reward the smartest or the fastest. It rewards the patient.