Article By Maksym Skotarenko
There is a particular type of investment bias that many investors have either observed professionally or experienced themselves. It is the case of the investor who diligently saves, follows markets, understand the logic of long-term investing and compounding, yet never actually invests, waiting for the market to pull back and provide a better entry point, or, put differently, attempting to time the market. It is one of the most commonly observed traits in retail investing, and, very often, one of the most quietly destructive and opportunistically costly.
Now consider the current market backdrop. Headlines over the past weeks have been dominated by volatility. The Nasdaq Composite index has entered correction territory, down more than 10% from its October peak. Oil, having surged to $120, is hovering around $100 a barrel as the Strait of Hormuz, through which roughly a fifth of the world's oil supply passes, remains closed due to the US-Israeli strikes on Iran. US mortgage rates are rising, and analysts warn of an inflationary shock reminiscent of the 1970s. This, one might assume, is precisely the environment that would prompt a reversal of the bias described above. Except such behaviour often persists in practice, with investors remaining in cash and justifying inaction on the basis that conditions must first materially improve and “settle down” before capital is deployed. History suggests this is exactly where the real cost lies, not in the corrections themselves. Sitting on cash and waiting for the right moment, whilst being slowly eroded by inflation, is costing investors more than most corrections ever will.
Let's consider a hypothetical scenario to see what such patience actually costs. An investor who held €10,000 in cash from January 2023, a reasonable moment to be cautious coming off the worst year for markets since 2008, would have missed the Nasdaq gaining over 100% through 2025. Even accounting for the downturn we are currently in, they are still substantially behind the investor who simply stayed invested. The historical data shows that markets spend roughly three out of every four years going up. Corrections, generally defined as drops of 10% or more, happen, but they are sharp and usually short-lived. The average correction lasts around four months. The upward trend, on the other hand, usually lasts for years. Waiting for the dip in the market means betting that the precise, unpredictable timing of a brief event will outweigh the steady compounding that happens in between. The chances of being surgically right are not good, even for a professional investor. As Peter Lynch, who ran the Fidelity Magellan Fund and turned it into one of the best-performing funds in history, observed: "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."
The data from JP Morgan Asset Management's Guide to the Markets for 1Q 2026, reflects the above from a historical context. Since 1950, stocks have delivered an average annual total return of 11.7%, which over twenty years would mean turning $100,000 into $908,783. US Treasury bills, seen as an interest bearing alternative to cash, have not even kept pace with inflation as $10,000 held in T-bills since 1996 grew to just $9,798 in real terms by end of 2025, while the same amount in large cap stocks grew to $90,943. The same report shows that an all-stock portfolio has delivered positive returns in 82% of all one-year periods since 1989, rising to 85% over three years and 93% over ten years. And crucially, the average bull market has lasted 70 months and delivered a 221% return, while the average bear market has lasted just 14 months with a loss of 39%. The opportunity cost of not being invested is simply too high. Investors who sold off all their investments and went fully into cash during the COVID crash of March 2020, when the S&P 500 fell 34% in a matter of weeks, and waited for certainty before re-entering, missed one of the strongest recoveries in market history. The S&P 500 reclaimed its pre-crash highs in just five months.
The current environment is a textbook example of why market-timing is so common amongst investors, but so costly. The Iran war, and its potential second- and third-order effects such as an energy shock and a spike in inflation, are real, making the uncertainty surrounding investing equally real. What is consistently underestimated, however, is that markets are forward-looking, and much of the uncertainty, along with a wide range of possible outcomes, has already been priced in. Hence, the moment investing feels most dangerous is often, ironically, the moment the long-term opportunity is most compelling. As Warren Buffett put it: "Be fearful when others are greedy, and greedy when others are fearful."
Needless to say, conclusions drawn from market history should not be interpreted as guarantees. Investors should never rely solely on historical patterns as predictors of future performance, nor abandon sound judgement in personal financial decisions or economic analysis. It is important for investors to always keep at least three to six months of living expenses in cash or cash equivalents before starting to invest. Whereas prudent asset allocation should reflect individual risk tolerance, capacity, and time horizon. But within a well-constructed portfolio, the historical evidence is remarkably consistent. Investing regularly in diversified portfolio of assets, regardless of what the headlines say, through a strategy known as dollar-cost averaging, removes the psychological burden of picking the perfect moment. Some investments will be made at higher prices, others at lower, but over time the average entry cost tends to work in the investor’s favour, smoothing returns and allowing compounding to take effect.
Financial markets will continue to face geopolitical, economic or financial shocks. Yet, over time, markets have consistently absorbed uncertainty, adjusted and continued to move higher. The challenge for investors is not predicting these events, but participating in the market despite facing them. Because the same conditions that make investing feel uncomfortable are often the ones that create the best long-term opportunities, and the cost of waiting has historically proven to be a far greater cost than the cost of being invested through periods of volatility. In the end, successful investing is rarely about the precision of buying an asset at a lowest possible price, but about the discipline, consistency and the time spent in the market.
Maksym Skotarenko is a Research Analyst and Portfolio Manager at Curmi & Partners Ltd.
The information presented in this commentary is solely provided for informational purposes and is not to be interpreted as investment advice, or to be used or considered as an offer or a solicitation to sell/buy or subscribe for any financial instruments, nor to constitute any advice or recommendation with respect to such financial instruments. Curmi & Partners Ltd, with registered address Finance House, Princess Elizabeth Street, Ta Xbiex, Malta XBX 1102, is a member of the Malta Stock Exchange and is licensed by the MFSA to conduct investment services business.