Market Timing – Crises and Strategy

• A disciplined investment process may improve outcomes by reducing reliance on unpredictable short-term market movements.

• New investors can manage sequencing risk by staggering entry rather than committing capital all at once.

• Existing investors are often best served by maintaining discipline through volatility rather than reacting to market sentiment.

For new investors, the primary challenge is sequencing risk – the risk that an immediate drop in markets leaves them instantly worse-off.

Deploying a lump sum on a single day creates short-term outcome dependence. If markets fall shortly after investment, the experience is negative from the outset. Even if fundamentals remain intact, confidence can erode quickly.

A staggered approach to investment helps address this. Reliance on a single entry point is reduced by allocating capital progressively. This smooths the path of entry, capturing a range of prices rather than a single market level. In periods of volatility, this often results in capital being deployed at more attractive valuations as markets decline.

For example, if markets fall after an initial investment, a staged approach allows subsequent allocations to be made at lower prices, improving the average entry level compared with a single lump-sum decision.

1. Avoid relying on a single entry point.

2. Consider phasing capital into the market over time.

3. Use volatility as an opportunity to accumulate quality assets.

4. Focus on long-term fundamentals rather than short-term headlines.

Crucially, this is not about attempting to time the market. It is recognition that short-term movements are unpredictable, particularly during crises. A structured investment plan removes the need to make repeated judgement calls in uncertain decisions.

The objective is not to maximise short-term returns. It is to improve consistency of outcomes and reduce the risk of materially adverse entry points.

For many investors, particularly those with large cash positions entering the market, this trade-off is both rational and desirable. In the words of Kenneth Fisher: Time in the market beats timing the market.

In this context, “HODL” refers to maintaining long-term investment positions despite periods of market volatility.

For investors already in the market, the challenge is maintaining discipline. Crises test conviction. Sharp downturns, negative headlines and heightened uncertainty create a strong temptation to act, often in ways that are counterproductive.

The risk here is not sequencing, but behaviour. Selling into weakness, delaying investment, or attempting to tactically adjust exposures based on short-term news can erode long-term returns.

Importantly, markets often recover before sentiment improves, meaning reactive decisions may result in missed recoveries. Markets are forward looking and do not wait for clarity. Discipline, therefore, becomes the central strategy.

Ultimately, successful investing through crises is not about avoiding volatility, but about navigating it effectively. For those already invested, this means staying the course and recognising that periods of stress are an inherent part of the investment cycle, not an aberration.

Across both cohorts, the common thread is clear. Whether deploying capital from cash or remaining invested through volatility, outcomes are improved not through prediction, but through process. A disciplined, structured approach helps investors manage uncertainty, participate in recoveries, and avoid the behavioural pitfalls that so often accompany market crises. This is less about reacting to events and more about maintaining a predefined process through them.