Timing Is Everything

In life, timing is everything. Meeting the love of your life, getting a big break in business, or winning the lottery – they require serendipitous timing. You can’t manufacture these events.

This pertains to investing, too. Timing is everything when it comes to stocks, but the odds are heavily stacked against anyone who tries timing the stock market.

I can think of three recent investing themes that seemed so obvious and intelligent that many investors rearranged their portfolios to position themselves for the seemingly imminent outcomes. Spoiler alert: All three themes have failed to deliver.

The first is that technology companies are overvalued and destined for an inglorious and flaming crash. There are relevant statistics brought to bear for this argument.

Measuring prices relative to company earnings is a common ratio for investors. The higher prices go compared to earnings, the more expensive the market becomes. For tech companies, these ratios are approaching dot-com-era levels, an ominous sign.

Another statistic often trotted out to support this argument is that the 10 largest companies in the U.S. have ballooned into a historically large share of total stock market value. This leaves the market vulnerable to big losses if these companies start to falter.

If you positioned your portfolio before 2025 to protect against the largest tech companies falling in value, your returns have probably averaged a respectable 9% this year. But by acknowledging we cannot time the market and abstaining from fiddling with your investment mix, you probably have enjoyed a return of 17.5% in 2025. It usually pays to do less.

The second investment theme I’ve heard is international companies are doomed to underperform relative to U.S. companies. Investors call it “U.S. exceptionalism.” And again, there are stats to bolster this conclusion. Over the past 15 years, U.S. stocks have walloped their international peers in terms of performance.

Investors for years have questioned the logic of holding international companies. This year finally provided the rationale. While the total U.S. stock market is up an impressive 16.8% in 2025, international companies are far out in front with a 28.6% return. Remember, there are a lot of great companies located outside our borders, and stock market performance historically has shown long stretches of international companies outperforming their U.S. counterparts.

There is one last investment theme I’ve heard, which is that small company stocks are poised to outperform their larger peers.

If you’re looking for stats to defend this position, you guessed, they are readily available. Here’s just one: The collective value of all small company stocks currently represents just 4.4% of the total U.S. stock market, whereas the average since 1984 has been 7.6%. This means, the thinking goes, small companies are spring-loaded for superior returns.

If that’s the case, the spring compressed even tighter this year. Look at performance. Again, large companies in the U.S. are up about 17.5%. Mid-sized companies have clocked a performance of 11.5% this year. And small companies? They are up the least at 7.2%.

Keep in mind, all three investment themes may eventually come to pass. But any investor who positioned their portfolio to benefit from these three themes in the past 12 to 18 months has left a significant amount of money on the table.

Even if the market eventually comes around to their way of thinking, it’s quite possible the gains they missed may never be recovered. It would take a severe downturn in all the right sectors and parts of the market to have made the moves worthwhile.

There’s no question that timing is everything in life. Unfortunately, no one can consistently time the market.

So I urge all investors to stop trying.