Why Bad Market Timing Matters Less Than You Think

“Every instinct I have, in every aspect of life, be it something to wear, something to eat… It’s all been wrong,” actor Jason Alexander says as the character George Costanza in the classic 1994 Seinfeld episode “The Opposite”—a feeling many investors know all too well. Buying high, selling low, panicking at the wrong moment—it can feel like we are often doing the opposite of what we should be.

But here’s the twist: our analysts tested what they’ve taken to calling the “Costanza strategy,” one where you buy at the market highs, going against everything you’ve likely been told about investing. They found that if you always bought at the worst possible time—annual stock market highs, even all-time peaks—the worst-timed investments still didn’t make that much difference from buying at market lows over long-term periods.

Turns out, even George, with his terrible instincts, could be more than just a loser in the market. Below, we take you through why this is the case and how you can win with bad instincts, too.

The Upside of Bad Instincts

Buying at market highs, like the ones we’ve seen this summer, often feels like you’re making a Costanza-like decision—doomed from the start. But history tells a different story.

Looking through data from 1958 to the present, we analyzed what would happen if you bought the S&P 500—an index that tracks 500 of the biggest U.S. companies and serves as a stand-in for “the stock market”—at the absolute worst time each year. Even these perfectly unlucky investors who bought at yearly peaks and held for 20 years still earned nearly 7% annually—certainly better than sitting out of the market out of fear or holding lower-yield bonds. And the results weren’t that far off from those who timed things perfectly by buying at yearly lows, who earned around 8%.

The table below shows two approaches: lump sum investors who bought once at the annual high or low and held for 20 years, and those who followed the “Costanza strategy” of buying every year at the high versus the low (labeled as DCA for dollar-cost averaging). In both cases, the gap between good and bad timing shrinks the longer you’re invested, reminding us that long-term compounding matters more than catching the exact right moment.

The lesson is that the real driver to having a good retirement isn’t timing—it’s compounding (your returns earning returns on top of returns) and the length of time you stay invested. Over two decades, recessions, bear markets, and crashes tend to get absorbed into the longer upward march of the market. Your initial investment grows, then those gains grow, then the gains on those gains grow—creating a snowball effect that makes early timing mistakes fade into background noise.

How We Ran the Numbers

To test what happens when you invest at the worst possible time, we looked at S&P 500 data going back to 1958. For every year, we identified the highest closing day (the market’s peak) and the lowest closing day (the trough).

From those dates, we calculated how much an investment would have grown if you bought then and held for one year, five years, or 20 years. We used compound annual growth rates to show the average yearly return over each period, then averaged those rolling results to see what investors could typically expect.

We also ran a second version using dollar-cost averaging: instead of one lump sum, we simulated someone putting in the same dollar amount each year at the annual high or low—an even more extreme version of the “Costanza strategy” that would buy at the worst moment each year, when stocks were most expensive.

Taken together, this rolling approach shows how bad timing actually plays out across decades—and why time in the market matters far more than perfect timing.

The Bottom Line

Perfect timing makes for a great story, but it doesn’t have to make or break your future. Even the “Costanza strategy” of always buying at the worst possible moment has historically delivered solid long-term gains if you were invested broadly in the stock market. The real difference isn’t in catching highs or lows — it’s in staying invested long enough for compounding to do its work. Whether you invest all at once or spread it out over time, patience, never George’s strong suit, matters more than luck.