Buy & Hold vs Market Timing: The Cost of False Precision

Every market fall eventually raises the same question.

Sometimes it’s voiced directly.
More often, it’s just a quiet thought that lingers:

“Wouldn’t it have been better to step aside and come back later?”

It’s a reasonable question. Sensible, even. If markets can fall sharply, surely avoiding the worst of the drop must improve outcomes?

This article isn’t about choosing sides between buy & hold and market timing.
It’s about understanding why market timing feels so compelling, why it so often disappoints, and what decades of evidence — and lived experience — suggest actually works for long-term investors.

If you’ve ever wondered whether it’s better to focus on time in the market rather than timing the market, you’re not alone.

Why market timing feels so sensible — and why that matters

Market timing appeals because it mirrors how we manage risk everywhere else in life.

If the weather looks bad, we delay the trip.
If the road ahead looks dangerous, we slow down.
If something feels overheated, we wait.

So when markets fall — or valuations look stretched — it feels natural to ask why investing should be any different.

But investing doesn’t reward comfort.
It rewards exposure to uncertainty, whether we like it or not.

And that’s where intuition and evidence begin to part company.

To outperform a disciplined long-term investment approach, any timing strategy has to get two decisions right, not one:

When to reduce risk
When to re-engage

Most discussions fixate on the first.
History suggests the second is where things quietly unravel.

The real problem with market timing: getting back in

Market recoveries don’t send invitations.

They don’t wait for clarity, confidence, or reassuring headlines. They often arrive:

quickly,
unevenly,
and during periods when pessimism still hangs in the air.

A meaningful share of long-term market returns has historically been delivered in short, sharp bursts, often clustered early in recoveries. Miss those periods, and the long-term arithmetic quietly changes — sometimes more than people expect.

This is where many investors get caught out.

The fear isn’t being wrong forever.
It’s being wrong at the wrong moment — selling after a fall and buying back only once things feel safe again.

By then, much of the recovery has already happened.

This isn’t a lack of intelligence or discipline. It’s human nature. I’ve lost count of the number of thoughtful, sensible people I’ve spoken to over the years who did the “right” thing in a falling market — only to find getting back in far harder than getting out.

This is also why we often talk about time in the market, not just entry points.
(See our related piece on this here:
Lump Sums vs Phased Investment: Ignore the Noise & Invest with Intention)

A useful story about being right… at the wrong time

This is why I often come back to a story Ray Dalio tells in his autobiography about the silver bubble in the late 1970s.

Dalio had done the work. He understood the supply dynamics, the speculative excess, the monetary backdrop. He became convinced a bubble was forming in silver — and he wasn’t wrong.

So he sold.

Not out of panic, but out of logic.

Then the market did exactly what he expected. Silver collapsed.

But here’s the detail that really matters — and that’s often glossed over.

The price didn’t fall back to where Dalio had sold.
It fell to a level that was still above his exit price.

He was right about the bubble.
Right about the direction.
Right about the eventual outcome.

And still, he didn’t benefit.

Being right and being right at the right time are two very different things. Markets don’t move on our schedule, and logic doesn’t protect us from volatility in the meantime.

Seeing something coming isn’t the same as capturing it.

Vanguard’s examples: helpful, but often misunderstood

Vanguard often illustrate this dynamic with simple comparisons:

staying invested through market falls, versus
selling after a large drop and reinvesting later.

These examples are sometimes criticised — fairly — for using crude rules that no serious investor would follow mechanically.

That criticism is valid.

But it slightly misses the point.

Vanguard aren’t presenting a trading system. They’re illustrating a behavioural reality:

Missing market recoveries is costly.

The examples are deliberately simple to make that cost visible. They’re not there to prove that all market timing is futile — only that mistiming can quietly erode long-term outcomes.

To really test the idea properly, we need to go deeper.

What the research actually tested (and why it’s different)

Rather than testing a single timing rule, Dimensional Fund Advisors asked a tougher question:

If we test many plausible market-timing strategies across markets and decades, do they reliably improve outcomes?

They simulated 720 different timing strategies, varying:

what was being timed (the overall market, size, value, and profitability),
how decisions were made (valuation signals, momentum, mean reversion),
where strategies were applied (the US, developed markets, emerging markets),
and how frequently portfolios were adjusted.

This matters because it removes the usual escape hatch:

“That’s not how I would time the market.”

Almost every version of timing investors commonly talk about was tested.

The problem isn’t that timing never works

At this point, a fair question often comes up:

Did any of the timing strategies actually beat staying invested?

The honest answer is: yes — a small number did.

Out of the 720 strategies tested, 30 showed statistically positive results compared to simply staying invested. That’s around 4%.

But those apparent successes shared a common flaw.

They were fragile.

Change a single assumption — how often the portfolio was adjusted, the precise signal used, the market it was applied to — and the advantage usually disappeared. Strategies that worked in one decade failed in the next. Those that appeared effective in one market didn’t translate elsewhere.

There was no timing approach that worked reliably across time, regions, and conditions.

That’s the hurdle most timing strategies fail to clear.

The hidden cost of market timing: missing recoveries

One of the most important insights from the research isn’t about averages or failure rates.

It’s about opportunity cost.

Market returns don’t arrive smoothly. They arrive unevenly, unpredictably, and often when confidence is lowest. If you’re out of the market during those moments — even briefly — the long-term impact can be significant.

This reframes the whole debate.

The biggest risk for long-term investors isn’t volatility itself.
It’s not being there when returns arrive.

Volatility feels like risk because it’s visible.
Absence feels safe because it’s quiet.

But over time, absence can be far more damaging.

Markets don’t reward comfort. They reward exposure to uncertainty — whether we like it or not.

If we’re not timing markets, what are we doing instead?

Rather than trying to predict short-term market movements, we focus on systematic, evidence-based investing.

That means building portfolios around well-researched factors — characteristics of investments that have historically been associated with higher expected returns — and staying disciplined through different market environments.

In simple terms, the five core factors we focus on are:

Market – participating in the growth of the global economy
Size – smaller companies have historically offered higher expected returns than larger ones
Value – companies with lower relative prices have tended to outperform over time
Profitability – more profitable companies have tended to deliver better long-term returns
Investment (asset growth) – companies that invest more conservatively have historically been rewarded

These aren’t guarantees. They’re expected rewards for taking certain types of risk, and they don’t show up smoothly or predictably.

We implement this approach using Dimensional funds, which are designed to capture these factors in a disciplined, diversified, and cost-effective way.

(Optional internal link: “How We Invest at Juniper” / “Our Investment Philosophy” page)

Where Juniper sits on this

At Juniper, we don’t believe good outcomes come from dramatic calls or clever timing.

They come from:

clarity about what matters,
discipline when markets are noisy,
and building portfolios people can actually live with.

Staying invested isn’t about stubbornness.
It’s about recognising that uncertainty is the price of progress — and paying it thoughtfully.

Good investing rarely feels exciting in the moment.
It just works quietly, over time.

And often, that quiet discipline is the hardest — and most valuable — part of the journey.

A final thought

If you’re wrestling with these questions in your own portfolio — or wondering how to stay disciplined when markets feel uncomfortable — that’s not a sign you’re doing it wrong.

It’s a sign you’re paying attention.

And that’s exactly where good long-term decisions begin.

Frequently asked questions

1. Are you saying market timing never works?

No — and that’s an important distinction.

Some market timing strategies do work in certain periods. The challenge is that they rarely work consistently, across different markets, decades, and conditions. The evidence suggests the bigger risk isn’t that timing never works, but that it’s extremely difficult to know which approach will work before the fact — and to stick with it when it stops feeling comfortable.

2. What about valuations — surely they matter?

Valuations matter, but not in the way most people expect.

They tend to be more useful for setting long-term expectations than for making short-term timing decisions. Markets can remain expensive — or cheap — for far longer than feels reasonable. Acting too early can be just as costly as acting too late.

3. Isn’t staying invested risky when markets are volatile?

Yes — and that’s exactly why long-term returns exist.

Volatility isn’t a flaw in investing; it’s the price paid for participating in growth. The aim isn’t to eliminate risk, but to take the right risks, in the right proportions, for the right reasons — and to build portfolios that people can live with through inevitable ups and downs.

4. What about professional investors — can’t they time markets better?

Professional investors have more tools, more data, and more experience — and even then, timing remains extremely difficult.

Ray Dalio’s experience during the silver bubble is a useful reminder. He correctly identified a bubble, sold out early, and still didn’t benefit because markets didn’t move on his timetable. Being right isn’t the same as being right at the right time.

5. If we’re not timing markets, what are we doing instead?

Rather than trying to predict short-term market movements, we focus on systematic, evidence-based investing.

This approach doesn’t rely on forecasts or clever calls. It relies on patience, diversification, and consistency.

6. What do you mean by “factor-based investing”?

Factor-based investing focuses on capturing long-term drivers of returns that have been observed across markets and over decades.