Don’t Try to Time the Market | Capital Group

Market Fluctuations

Don’t Try to Time the Market

PROBLEM: Research has shown that losses feel twice as bad as gains feel good.
SOLUTION: Keep in mind that fleeing the market to reduce losses could mean losing out on gains when stocks recover.


The Market Has Shown Resilience  

Every S&P 500® downturn of about 15% or more since the 1930s has been followed by a recovery. 

Recoveries Have Been Strong

Returns in the first year after each market decline ranged from 36.16% to 137.60% and averaged 70.95%. Over a longer term, the average value of an investment more than doubled over the five years after each market low.

Don’t Miss Out on Potential Market Rebounds

Although recoveries aren’t guaranteed, taking your money out of the market during declines means that if you don’t get back in at the right time, you’ll miss the full benefit of market recoveries.

The Bottom Line?  

Consider staying invested and not trying to time the market.


Five Biggest Market Declines and Subsequent 5-Year Periods (1929–2016)1

1 Market downturns are based on the five largest declines in the S&P 500’s value (excluding dividends and/or distributions) with 50% recovery after each decline.

2 The return for each of the five years after a low is a 12-month return based on the date of the low. For example, the first year is the 12-month period from 3/9/09 to 3/9/10.


The percent decline is based on the index value of the unmanaged S&P 500 excluding dividends and/or distributions. Each market decline reflects a period of more than 80 days with 100% recovery after each decline (except for a 77% recovery between 3/9/09 and 4/29/11). The average annual total returns and hypothetical investment results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes. Standard & Poor’s 500 Composite Index is a market capitalization-weighted index based on the results of 500 widely held common stocks. Past results are not predictive of results in future periods.


Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation. 

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.