Time in the Market Beats Timing the Market: The Complete XEQT Proof

My buddy Dave is a smart guy. Engineer. Analytical mind. Reads The Economist. He is exactly the type of person who believes he can outsmart the stock market – and in March 2020, he was sure he had figured it out.

When COVID hit and the market dropped 30% in three weeks, Dave sold everything. All of it. His TFSA, his RRSP, even the XEQT he had been slowly accumulating for two years. “This is going to get way worse,” he told me over the phone. “I’ll buy back in when things settle down.”

He was right that things felt terrible. He was wrong about everything else.

The market bottomed on March 23, 2020. By the time Dave felt “comfortable” enough to buy back in – mid-June, when the news was finally less apocalyptic – the market had already recovered nearly 40% from the bottom. He sold low, waited on the sidelines while the biggest rally in a decade happened, and bought back in at roughly the same price he sold at. After accounting for trading costs and the dividends he missed, he was down about $7,000 compared to doing absolutely nothing.

Dave’s mistake was not that he panicked. Panic is human. His mistake was believing he could predict when the market would fall and – more importantly – when it would recover. That is the trap of market timing, and it catches even the smartest people.

This article is the data-driven case for why time in the market beats timing the market, why XEQT is the perfect vehicle for staying invested, and what you should do instead of trying to predict where markets are headed.

Disclosure: I may receive a referral bonus if you sign up through links on this page.

1. The Data: What Missing the Best Days Actually Costs You

This is the single most important chart in investing, and once you see it, you cannot unsee it.

Stock market returns are not spread evenly across time. The vast majority of long-term gains come from a tiny number of extraordinary days. Miss those days, and your returns collapse. The problem? Those best days almost always happen during periods of extreme volatility – the exact moments when market timers are sitting on the sidelines in cash.

Here is what the data shows for a hypothetical $10,000 investment in global equities over a 20-year period (based on MSCI World Index data, representative of XEQT’s global equity exposure):

Read that last row. If you missed just the 30 best trading days out of roughly 5,000 over 20 years, your $10,000 investment would have actually lost money. You would have been better off stuffing cash under your mattress.

That is 30 days out of 5,000. That is 0.6% of all trading days. And missing them turned a $46,610 gain into a $1,500 loss.

Here is the kicker: those best days almost always cluster around the worst days. The single biggest up day in the S&P/TSX Composite in the last 30 years happened in March 2020 – the same month Dave sold everything. Seven of the ten best days in market history occurred within two weeks of the ten worst days.

If you are out of the market during the scary times, you will almost certainly miss the recovery. And missing the recovery is where the real damage happens.

2. Why Timing Feels Smart But Isn’t: The Psychological Trap

If market timing is such a losing strategy, why do so many people try it? Because our brains are essentially wired to believe we can do it. Several well-documented cognitive biases conspire to make timing feel like the intelligent choice.

Overconfidence bias

Most investors believe they are above average. Studies consistently show that roughly 75% of individual investors rate their own investing ability as “above average” – a statistical impossibility. This overconfidence makes us believe that we can spot the top and the bottom, even though the data says almost nobody can.

Hindsight bias

After every crash, the signs seem obvious in retrospect. “Of course the 2008 housing market was going to collapse – just look at those subprime mortgage numbers.” “Obviously COVID was going to crash markets – it was a global pandemic.” In hindsight, every crash looks predictable. In real time, nothing is predictable. The market priced in the 2020 crash and the recovery faster than almost anyone anticipated.

Loss aversion

We feel the pain of losses roughly twice as intensely as the pleasure of equivalent gains. When your portfolio drops 20%, the emotional impulse to “do something” is overwhelming. Selling feels like taking control. Staying invested feels like doing nothing while your money burns. But inaction is the action. Staying the course is the strategy.

Media amplification

Financial media makes money by keeping you anxious. “Markets plunge!” gets more clicks than “Markets do what markets always do.” Every correction comes with wall-to-wall coverage of experts predicting further declines, historical parallels to 1929, and countdown clocks to the next recession. None of this helps you make better decisions. All of it makes you more likely to sell at the worst possible moment.

The combination of these biases creates a powerful illusion: the feeling that selling before a crash and buying back at the bottom is not only possible but obvious. It is neither. It is a fantasy that costs real money.

3. The Math of “Time In”: Why Compound Growth Needs Uninterrupted Time

Compound growth – the process of earning returns on your returns – is the most powerful force in investing. But it has one requirement that most people underestimate: it needs time, and it needs that time to be uninterrupted.

Every time you sell and sit in cash, you break the compounding chain. You convert paper losses into real losses, miss the dividends that get reinvested, and restart the compounding clock when you buy back in.

Here is what consistent $500/month contributions to XEQT look like over different time horizons, assuming a 7% average annual return (a conservative estimate for a globally diversified equity portfolio):

Look at that 30-year row. You contributed $180,000 of your own money, but your portfolio is worth $610,000. That means $430,000 came from compounding alone – your money making money making money. And here is the critical point: the vast majority of that compounding happens in the later years. The growth from year 20 to year 30 is far larger than the growth from year 1 to year 10.

This is why staying invested matters so much. If you sell and sit in cash for even a year or two, you do not just miss that year’s returns. You miss the compounding that those returns would have generated for every year after that. The damage is not linear – it is exponential.

For a deeper dive into these numbers, check out the full guide on how long it takes to reach $100K with XEQT.

4. What About “Obvious” Crashes? Debunking the Easiest Market-Timing Argument

I hear this one constantly: “Sure, you can’t time every little dip, but the big ones are obvious. Everyone knew COVID was going to crash the market. I’ll just sell during the obvious ones.”

Let me address this directly, because it sounds so reasonable.

The COVID argument

Yes, COVID was scary. Yes, markets dropped 35%. But here is what people forget: nobody knew when the bottom would come or how fast the recovery would be. On March 12, 2020, markets had dropped 20%. Many people sold. Markets then dropped another 15% in the next seven trading days. Those who sold at -20% felt vindicated. But then, without any clear signal, the market reversed. By April 14, it had recovered half the loss. By August, it was back to pre-COVID levels.

If you sold in March, at what point did you buy back in? When the news was still terrible? When unemployment was at 13%? When experts were predicting a second wave? There was no moment where it felt “safe” to buy back in. There never is.

The “sell at -20%” rule

Some investors try to create mechanical timing rules: “I’ll sell if the market drops 20% from its peak.” Here is why this fails:

• A 20% drop often recovers before you can react. The December 2018 correction hit -20% and bounced back within weeks.
• You still don’t know when to buy back in. Selling is the easy part. Buying back in – when every headline is screaming that things will get worse – is psychologically almost impossible.
• It triggers taxable events. In a non-registered account, selling crystallizes capital gains or locks in losses. Both have tax consequences that erode your returns.
• Transaction costs add up. Even on commission-free platforms, bid-ask spreads cost you money on every sell and every buy.

The “obvious” crash is only obvious after the fact. In real time, every crash looks like it could get worse. That is why the correct strategy is to stay invested, keep buying, and let time do the work.

5. The Two Decisions Problem: Why Market Timing Is Twice as Hard as You Think

Here is the thing that most would-be market timers do not consider: to time the market successfully, you need to be right twice. You need to correctly identify when to sell, and then you need to correctly identify when to buy back in.

Getting one right and the other wrong is worse than doing nothing.

Let me illustrate with four scenarios for a $50,000 XEQT portfolio during a hypothetical 30% crash and subsequent recovery:

The “perfect timing” scenario looks amazing – but it requires superhuman precision. You would need to sell within days of the top and buy back within days of the bottom. In practice, nobody does this consistently. Even the scenario where you sell early and buy back “slightly wrong” leaves you worse off than doing nothing.

The buy-and-hold investor in row one did literally nothing and ended up at $50,000. The panicked seller in row four lost $12,500 – a 25% permanent destruction of capital – by trying to be smart.

This is the two-decisions trap. The odds of getting both right are far lower than the odds of getting at least one wrong. And getting even one wrong means you would have been better off staying in your chair and doing nothing.

6. What the Professionals Can’t Do (and Why You Shouldn’t Try)

If market timing worked, the people with the most resources, data, and expertise would do it consistently. They don’t.

Every year, S&P Global publishes the SPIVA (S&P Indices Versus Active) scorecard, which measures how actively managed funds – run by people whose full-time job is beating the market – perform against simple index benchmarks. The results are devastating for active management and, by extension, for the idea that anyone can time the market:

Over 15 years, roughly 90% of professional fund managers – people with Bloomberg terminals, research teams, PhDs in quantitative finance, and access to information you will never see – failed to beat the simple index that XEQT tracks.

These are not retail investors reading Reddit posts. These are the most informed, best-resourced investors on the planet. If they cannot consistently time the market and beat a passive index, the idea that you or I can do it by watching BNN Bloomberg and reading a few earnings reports is, to put it gently, unrealistic.

And here is the final twist: the few funds that do outperform in one period almost never repeat that outperformance in the next. Past winners become future losers with remarkable consistency. There is no reliable way to identify which managers will outperform in advance.

The logical conclusion is straightforward: if the professionals cannot beat the index, your best strategy is to own the index. That is exactly what XEQT gives you.

7. How XEQT Makes Staying Invested Easy

Understanding why you should stay invested is one thing. Actually staying invested through a 30% crash is another. This is where XEQT’s design matters – it is specifically built to make the “stay the course” strategy as painless as possible.

• Global diversification in one fund. XEQT holds over 9,000 stocks across roughly 49 countries. When Canada struggles, the US might be booming. When developed markets stall, emerging markets might surge. This diversification smooths out the ride and makes it psychologically easier to stay invested, because you are never fully exposed to any one country’s problems.

• Automatic rebalancing. When one region outperforms and becomes overweighted in the portfolio, BlackRock automatically rebalances XEQT back to its target allocation. You never need to decide whether to sell your US stocks and buy more Canadian stocks. It happens for you. One less reason to log in to your brokerage.

• Low cost, no friction. At a 0.20% MER, XEQT costs you $2 per year for every $1,000 invested. On commission-free platforms like Wealthsimple, there is literally zero cost to buy. No trading fees, no account minimums, no reason to hesitate.

• Dividends handled for you. XEQT’s underlying holdings pay dividends, which flow through to you. If you have DRIP set up on Wealthsimple, those dividends get automatically reinvested. More compounding, more shares, zero effort.

• Nothing to manage. There are no individual stocks to research, no sectors to overweight, no earnings calls to listen to. The single best thing about XEQT for staying invested is that there are no decisions to make. Buy it, set up auto-invest, and walk away. The less you interact with your portfolio, the better your returns tend to be.

This is not a coincidence. XEQT is designed for exactly the strategy we are talking about: get in the market, stay in the market, and let time do the work.

8. The Practical Framework: What to Do Instead of Timing the Market

If market timing is out, what should you actually do? Here is the straightforward playbook that replaces guessing with a system.

Step 1: Set up automatic contributions

The single most important thing you can do is automate your investing. Set up a recurring transfer from your bank account to your Wealthsimple account, and schedule automatic XEQT purchases on the same day each month (or every two weeks, if that aligns with your paycheque).

When your investing is automatic, you remove the decision entirely. You do not need to decide whether “now is a good time.” You do not need to check the price. You do not need to think about it at all.

Step 2: Dollar-cost average relentlessly

Dollar-cost averaging (DCA) means investing the same amount at regular intervals regardless of market conditions. When prices are high, your fixed amount buys fewer shares. When prices are low, it buys more shares. Over time, this naturally lowers your average cost per share and removes the emotional component of investing.

DCA is the anti-timing strategy. Instead of trying to buy at the bottom, you buy all the time. It is boring, it is mechanical, and it works.

Step 3: Ignore the noise

Unsubscribe from market prediction newsletters. Stop watching daily market commentary. Do not check your portfolio more than once a month – and even that is generous. Every piece of financial media you consume is designed to make you feel like you should be doing something. The correct response is almost always to do nothing.

If you struggle with this, I wrote a whole piece on how to stop checking your XEQT portfolio. The strategies in there are practical and they work.

Step 4: Reframe downturns as opportunities

When the market drops 20%, do not think “I’m losing money.” Think “XEQT is on sale.” If you are in the accumulation phase of your investing life (years or decades away from retirement), market crashes are genuinely good for you. They let you buy more shares at lower prices. The people who get wealthy in the stock market are the ones who keep buying during the scary times.

Step 5: Keep a written plan

Write down your investment strategy. Something as simple as: “I invest $500 per month in XEQT in my TFSA. I do not sell during downturns. I will continue this until I am 60.” When panic hits, read the plan. Having a written commitment makes it significantly harder to deviate. You are not making a decision in the moment – you are following a plan you made when you were thinking clearly.

9. Time in Market vs. Timing the Market: The Full Comparison

Let me put the whole argument into one summary table. These scenarios follow two hypothetical Canadian investors over 20 years, each starting with the same $500/month contribution.

The difference between the two approaches over 20 years could easily be $50,000 to $100,000 – and that is a conservative estimate. That is the cost of trying to be clever.

10. DCA Through the Storms: What Consistent Investing Looks Like in Practice

To make this concrete, here is what staying invested through actual recent market events would have looked like for a Canadian investor contributing $500/month to XEQT.

Every one of those scary periods was followed by a recovery. The investors who stayed in and kept buying accumulated more shares at lower prices, which amplified their returns when the recovery came. The investors who sold, waited, and tried to time the bottom missed the best days and permanently damaged their long-term wealth.

This is the beauty of dollar-cost averaging: it turns every crash into an opportunity. When prices drop, your $500 buys more shares. When prices recover, those extra shares are worth more. The math works in your favour as long as you stay in the game.

Final Thoughts: The Best Time to Invest Was Yesterday, the Second Best Time Is Now

My buddy Dave eventually came around. After watching me do absolutely nothing through the 2020 crash, the 2022 correction, and every scary headline in between – and watching my portfolio steadily grow while his bounced around from one timing mistake to the next – he set up automatic $500 monthly XEQT purchases on Wealthsimple last year.

“I’ve never felt more relaxed about money,” he told me recently. “I don’t even check it anymore.”

That is the real benefit of the “time in the market” approach. It is not just that it produces better returns – though it does. It is that it frees you from the constant anxiety of trying to predict the unpredictable. You stop watching the news for market signals. You stop second-guessing every purchase. You stop feeling that knot in your stomach when markets dip.

You just buy, hold, and live your life. And over 10, 20, 30 years, the math takes care of the rest.

Here is my summary of everything we covered:

• Missing just the 30 best trading days over 20 years can turn a profit into a loss. Those best days happen during the scariest periods.
• Market timing requires being right twice – when to sell and when to buy back in. Getting even one wrong is worse than doing nothing.
• 90% of professional fund managers underperform their benchmarks over 15 years. If they cannot time the market, neither can you or I.
• Compound growth needs uninterrupted time. Every year out of the market costs you far more than that year’s returns.
• XEQT makes staying invested effortless. Global diversification, auto-rebalancing, and a 0.20% MER mean you never need to touch it.
• Automate, dollar-cost average, ignore the noise. That is the entire strategy. It takes 15 minutes to set up.

The market will crash again. It always does. When it happens, remember this article, remember the data, and remember Dave. Then do nothing, keep buying, and let time do what time does best.

Related Reading

• Dollar-Cost Averaging with XEQT
• What Happens When You Miss the Best Market Days
• The Cost of Waiting to Invest
• How to Stop Checking Your XEQT Portfolio
• Automate Your XEQT Investing on Wealthsimple

XEQT (iShares Core Equity ETF Portfolio) is a long-term investment. Returns are not guaranteed, and past performance does not predict future results. This article is for educational purposes and is not financial advice. Always consider your personal financial situation before making investment decisions.