Is Now a Good Time to Be In the Markets?

Jacob Sturgill, CFP®

There is one question that seems to be growing in popularity over the past several months. The question is not unique to a particular age group, it is pervasive among most of my clients and seems to be lurking in the back of everyone’s mind. You too may be wondering, “Is now a good time to be in the markets?” I think many would even prefer to ask it this way, “Should I be investing in the market because I am afraid of what might happen soon?”

Since we cannot predict the future, my response is to counter with a different question that allows us to take a different, but critical perspective, “What is the risk of you NOT being invested in the market now?”

In 1984, Mr. Miyagi taught the Karate Kid and us that, “It’s never okay to lose to fear.” While investing involves risk, not investing involves risk too. For most, achieving your financial goals, which include retirement, college savings, etc., likely requires your assets to grow at a specific rate of return on average. For this to be accomplished, you likely need to have at least some exposure to the stock market at all times. Taking your money out of the market leaves you at risk of missing out on stock market gains necessary for your portfolio to help you in reaching your financial goals.

There’s no doubt that investing requires faith. For us to stay the course, regardless of what may or may not happen tomorrow, we need to believe in free markets and that businesses will continue to find a way to be profitable. Over time, capital markets have historically provided a reasonable rate of return for the level of risk one takes. Regardless of the degree of risk, some risk is necessary to experience growth.

Let’s consider this, if you invested $1 in each of the following asset classes in 1926, and did nothing else with this initial investment, here is what your investment would have been worth in 2016:1

  • Inflation (CPI)-$13
  • Treasury Bills-$21
  • Long Term Government Bonds Index – $134
  • US Large Cap Index – $6,031
  • US Small Cap Index- $20,544


Take no risk, and you’ll have no reward. If this doesn’t make you feel any better about your decision to stay invested, remember that volatility and intra-year pullbacks are a regular part of investing and are to be expected rather than feared. According to a study done by JP Morgan, as of December 31, 2016, the average intra-year drop of the S & P 500 was 14.2% going back to 1980. Despite this volatility, annual returns were positive in 28 of 37 years.

Another risk of not staying invested is that you’ll miss out on some of the best days of the market. Six of the ten best days of the market occurred within two weeks of the ten worst days. If you pull your money out because of fear, you are likely to miss the best days. Let’s take a look back and see how fear might have impacted your investment returns from January 2, 1996, to December 31, 2015.2

  • 8.18% – Stayed fully invested
  • 4.49% – Missed 10 best days
  • 2.05% – Missed 20 best days
  • 1.96% – Missed 40 best days


The average investors return during this period was 2.1%, lower than inflation (2.2%), meaning the average investor missed 20 of the best days in the market. Just like you can’t predict when the worst is coming, you also cannot predict when the best is coming.

While I can’t tell my clients what the markets will do tomorrow, I can provide them with sound recommendations and advice to help them do the following:

  • Create an investment plan that fits needs and risk tolerance
  • Structure a portfolio around dimensions of returns suited to your unique goals
  • Diversify broadly
  • Seek to reduce expenses and turnover
  • Strive to minimize taxes
  • Stay disciplined


  1. Dimensional, Capital Markets Have Rewarded Long-Term Investors (2017), at In USD. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. US Small Cap is the CRSP 6–10 Index; US Large Cap is the S&P 500 Index. Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Long-Term Government Bonds is the IA SBBI US LT Govt TR USD, provided by Ibbotson Associates via Morningstar Direct. US Inflation is measured as changes in the US Consumer Price Index. US Consumer Price Index data is provided by the US Department of Labor Bureau of Labor Statistics. CRSP data is provided by the Center for Research in Security Prices, University of Chicago. The S&P data is provided by Standard & Poor’s Index Services Group. Past performance is no guarantee of future results.
  2. J.P.Morgan Asset Management, Guide to the Markets, at


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Stock investing involves risk including loss of principal.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Examples are hypothetical and not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.