By Sabrina Karl

“Buy low, sell high” has been touted as the simplest investment advice there is. Unfortunately, while it makes sense in theory, in practice it’s a flawed strategy that most investors are best off ignoring.

“Buy low, sell high” is also called market timing, and the reality is that no one can do it reliably. Even money managers paid to spend full-time hours analyzing the markets rarely time things perfectly. And even if they manage to perfectly capture the right buy and sell opportunities in one particular market cycle, doing so reliably over time isn’t sustainable.

That’s because markets are extremely unpredictable, and timing them involves making the right move not just once, but twice. First you have to choose the right buy point, and then you also have to choose when to sell. Nailing this on both ends, as well as across all your investments over time, is a pipe dream.

Many studies have illustrated the case against market timing, including a 2021 Charles Schwab analysis. They analyzed stock market returns for every 20-year period from 1926 through 2020 and assumed an annual investment of $2,000 according to five timing strategies.

Not surprisingly, an investor with a crystal ball who could perfectly invest their funds on the market’s lowest day each year did the best over 20 years. But investing all of the money on the market’s first day each year earned only 10% less over 20 years.

Next best was splitting the investment up over 12 months. But even investing on the very worst market day each year led to triple the earnings over someone holding the funds in cash instead of investing.

So to maximize returns, consider swapping out “Buy low, sell high” with “The best time to invest is whenever you have the money.”