Why you don’t have to be a good market timer to be a successful investor
- - - Why you don’t have to be a good market timer to be a successful investor
Sam RoJuly 14, 2025 at 1:43 AM
A version of this post first appeared on TKer.co
I recently wrote about the unluckiest market timer I know. This unfortunate fellow has a history of making big, lump-sum purchases near market tops.
Unfortunately, that unlucky market timer is me.
After doing my 2024 tax returns in February, I learned I had some extra cash to put to work. So, I tossed it into my self-employed 401(k) plan and made a lump sum purchase of an S&P 500 index fund on Feb. 18.
The market climbed to a new record high the very next day. That ended up being a top, and from there the S&P 500 proceeded to fall by around 20% before bottoming on April 7.
But was I as unlucky as I felt in the moment? As unpleasant as that experience was, I knew I had the luxury of time and that I shouldn’t let my emotions get near my portfolio. Because as TKer Stock Market Truth No. 2 reminds us, double-digit, intra-year drawdowns are typical even in upward-trending markets.
"Despite average intra-year drops of 14.1%, annual returns were positive in 34 of 45 years," JPMorgan observed. (Source: JPMorgan)
That self-counsel proved wise. The stock market surged from its April lows and set a new record high on June 27. It was a quicker recovery than usual and what I would’ve expected. But that’s the stock market for you.
It took just over four months to return to all-time highs. (Source: Yahoo Finance)
As I wrote back in March, "Time is the unlucky market timer’s best friend."
All-time highs have been a great time to buy 👍
The stock market usually goes up. Over 6-month, 1-year, 2-year, 3-year, and 5-year periods, the S&P 500 on average has generated positive returns.
That trend even applies to record market highs. As data from JP Morgan Asset Management shows, investing specifically at all-time highs generated even higher average returns over these time horizons.
Buying at all-time highs is as good as or better than buying at any other level. (Source: JPMorgan)
"Investors usually use all-time highs as a reason to stay in cash or on the sidelines," JP Morgan analysts wrote. "However, history suggests that investing at all-time highs is not a bad strategy because new highs are typically clustered together. In other words, market strength begets more market strength."
If you have money to put to work in the stock market, it’s reasonable first to ask if market conditions are attractive.
Unfortunately, it’s impossible to know if or when prices will fall before climbing again. And waiting for lower prices risks missing out on important gains.
The key question is whether you are willing and able to put in the time. The longer your investment timeframe, the better your odds of generating a positive return.
The best thing about all this is knowing that you don’t have to be a good market timer to be a successful investor.
Review of the macro crosscurrents 🔀
There were several notable data points and macroeconomic developments since our last review:
💼 New unemployment claims tick lower. Initial claims for unemployment benefits declined to 227,000 during the week ending July 5, down from 232,000 the week prior. This metric remains at levels historically associated with economic growth.
(Source: DoL via FRED)
Insured unemployment, which captures those who continue to claim unemployment benefits, rose to 1.956 million during the week ending June 28. This is the print since November 2021.
(Source: DoL via FRED)
Steady initial claims confirm that layoff activity remains low. Rising continued claims confirm hiring activity is weakening. This dynamic bears watching as it reflects a deteriorating labor market.
For more context, read: The hiring situation 🧩 and The labor market is cooling 💼
🤑 Wage growth is cool. According to the Atlanta Fed’s wage growth tracker, the median hourly pay in June was up 4.2% from the prior year, down from the 4.3% rate in May.
(Source: Atlanta Fed)
For more on why policymakers are watching wage growth, read:Revisiting the key chart to watch amid the Fed's war on inflation 📈
👍 Inflation expectations cooled. From the New York Fed’s May Survey of Consumer Expectations: "Median inflation expectations decreased by 0.2 percentage point to 3.0% at the one-year-ahead horizon. They were unchanged at the three-year- (3.0%) and five-year-ahead (2.6%) horizons in June."
(Source: NY Fed)
The introduction of new tariffs risks higher inflation. For more, read: 5 outstanding issues as President Trump threatens the world with tariffs 😬
⛽️ Gas prices tick lower. From AAA: "With summer road trips in full swing, drivers are getting a break at the pump, as gas prices match July 2021 numbers. The national average for a gallon of gas dipped as low as $3.14 this past week before going up a few cents to $3.17. It’s been four years since the national average has been this low during the summer. This season’s lower pump prices are due to an abundance of supply in the oil market. Halfway through the year, the national gas price comparison chart shows how steady prices have remained in 2025 compared to recent years."
(Source: AAA)
For more on energy prices, read:Higher oil prices meant something different in the past 🛢️
💳 Card spending data is mixed. From JPMorgan: "As of 02 Jul 2025, our Chase Consumer Card spending data (unadjusted) was 3.5% above the same day last year. Based on the Chase Consumer Card data through 02 Jul 2025, our estimate of the US Census June control measure of retail sales m/m is 0.41%."
(Source: JPMorgan)
From BofA: "Credit and debit card spending per household increased 0.2% year-over-year (YoY) in June, compared to 0.8% YoY in May, according to Bank of America aggregated card data. Seasonally adjusted (SA) spending per household rose 0.3% month-over-month (MoM) in June, but that only partially unwound the MoM declines of 0.2% and 0.7% in April and May."
(Source: BofA)
For more on consumer spending, read: Americans have money, and they're spending it 🛍️
👎 Small business optimism ticks lower. The NFIB’s June Small Business Optimism Index declined to 98.6 in June from 98.8 in May. From the report: "Small business optimism remained steady in June while uncertainty fell. Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs."
(Source: NFIB)
(Source: NFIB)
For more on the state of sentiment, read: The confusing state of the economy 📊 and Beware how your politics distort how you perceive economic realities 😵💫
🏠 Mortgage rates tick higher. According to Freddie Mac, the average 30-year fixed-rate mortgage rose to 6.72%, up from 6.67% last week. From Freddie Mac: "After declining for five consecutive weeks, the 30-year fixed-rate mortgage moved slightly higher following a stronger-than-expected jobs report. Despite ongoing affordability challenges in the housing market, home purchase and refinance applications are responding to the downward trajectory in rates, increasing by 25% and 56%, respectively, compared to the same time last year."
(Source: Freddie Mac)
There are 147.8 million housing units in the U.S., of which 86.1 million are owner-occupied and about 34.1 million are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to the small weekly movements in home prices or mortgage rates.
For more on mortgages and home prices, read:Why home prices and rents are creating all sorts of confusion about inflation 😖
🏢 Offices remain relatively empty. From Kastle Systems: "Peak day office occupancy was 58.3% on Thursday last week, as workers stayed home or took leave in the days leading up to the July 4th holiday. Every tracked city experienced decreases on Monday, Tuesday, and especially Wednesday – down nine points from the previous week to 52.9%. Chicago, San Jose, and New York City had the largest drops on Wednesday, falling more than 14 points to 58%, 13.5 points to 43.7%, and more than 11 points to 54.6%, respectively. The average low was on Friday at 34.9%, up nearly three points from the previous week."
(Source: Kastle)
For more on office occupancy, read:This stat about offices reminds us things are far from normal 🏢
📈 Near-term GDP growth estimates are tracking positively. The Atlanta Fed’s GDPNow model sees real GDP growth rising at a 2.6% rate in Q2.
(Source: Atlanta Fed)
For more on GDP and the economy, read:9 once-hot economic charts that cooled 📉 and You call this a recession? 🤨
Putting it all together 📋
🚨 The Trump administration’s pursuit of tariffs threatens to disrupt global trade, with significant implications for the U.S. economy, corporate earnings, and the stock market. Until we get more clarity, here’s where things stand:
Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices.
Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the Federal Reserve — having resolved the inflation crisis — shifted its focus toward supporting the labor market.
But growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less "coiled" these days as major tailwinds like excess job openings and core capex orders have faded. It has become harder to argue that growth is destiny.
Actions speak louder than words: We are in an odd period, given that the hard economic data decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continues to grow and trend at record levels. From an investor’s perspective, what matters is that the hard economic data continues to hold up.
Stocks are not the economy: There’s a case to be made that the U.S. stock market could outperform the U.S. economy in the near term, thanks largely to positive operating leverage. Since the pandemic, companies have aggressively adjusted their cost structures. This came with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth.
Mind the ever-present risks: Of course, we should not get complacent. There will always be risks to worry about, such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, and cyber attacks. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets.
Investing is never a smooth ride: There’s also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect as they build wealth in the markets. Always keep your stock market seat belts fastened.
Think long-term: For now, there’s no reason to believe there’ll be a challenge that the economy and the markets won’t be able to overcome over time. The long game remains undefeated, and it’s a streak that long-term investors can expect to continue.
A version of this post first appeared on TKer.co
Source: AOL Money
