"I'll Wait for the Dip" — How Market Timing Keeps People on the Sidelines

In March 2020, Mr. Zhang told me he was going to start investing. “The market is too volatile right now — I'll wait until the pandemic settles.” By early 2021 the market had recovered; he said, “It's run up too much. I'll wait for it to come back down.” In 2022 it did fall; he said, “It hasn't bottomed yet — let's wait a bit longer.” By late 2024, he was still waiting.

He never invested. What he waited for was the passage of time.

Waiting for the dip sounds smart — but it has a maths problem

Market timing rests on one assumption: that you can identify the low point before everyone else, and buy at exactly the right moment.

This assumption is almost always wrong — not because you lack intelligence, but because every market participant, including full-time fund managers overseeing billions of ringgit, is making the same judgement. The result is that every current price already reflects the collective expectations of all those participants.A “low point” is only identifiable in retrospect.

The practical problem: waiting has a cost. Every day your money sits uninvested, it is not compounding. If the market rises 20% during your two-year wait, your opportunity cost is 20% — even if you eventually buy at a relative low.

What missing the best days actually costs

Financial research has a classic comparison using the S&P 500 (Malaysia does not have equivalent long-run standardised data, but the logic applies broadly):

• Fully invested 2003–2023 (20 years): approximately 9.8% annualised return.
• Miss the 10 best days in those 20 years: annualised return drops to approximately 5.6%.
• Miss the 20 best days: drops to approximately 2.9%.

The critical point: the best single days very often follow immediately after the steepest falls. Waiting for the market to “stabilise” before entering means you are most likely to miss the sharpest recoveries.

(The numbers above are illustrative, based on S&P 500 historical data. Malaysian market returns differ; past performance does not predict future results.)

Dollar-cost averaging: a method that doesn't require guessing

For most people who are not planning to research markets full-time, there is a straightforward alternative: dollar-cost averaging (DCA) — investing a fixed amount at regular intervals, regardless of market level.

The logic is not “buy more at the low.” It is “use discipline to make timing unnecessary”: when markets are high, the same amount buys fewer units; when markets are low, it buys more. Over the long run, your average cost trends toward something reasonable — and you do not need to predict anything.

The real cost of waiting

Over Mr. Zhang's four years, had he invested his regular monthly savings into a diversified fund using dollar-cost averaging, his accumulated position would be meaningfully higher than the same money sitting in a savings account waiting for the “right moment.” He did not wait for the bottom — he waited for four years at a higher entry point, having missed four years of compounding.

The real cost of “wait for the dip” is not buying at the top. It is never buying at all.

Licensed Chartered Financial Planner (BNM-LCFP) · JMarc
Market data in this article uses S&P 500 historical figures for illustrative purposes only and does not represent the performance of any Malaysian fund or index. Past performance does not predict future results. This article does not constitute investment advice or a recommendation of any product.