Is It Really Okay to Ignore the Noise?

What the Evidence Says About Market Timing and the Power of Staying the Course

On any given day, the financial world is buzzing with activity. Between morning newsletters, app notifications, and casual conversations about the latest market movements, investors are constantly fed a stream of updates. The implicit message behind all this noise is almost always the same: you need to take action. But when faced with this daily influx of information, a quiet question often arises: is it actually better to just ignore it all and leave your portfolio alone? The historical evidence strongly suggests yes—provided you’ve built the right portfolio from the start.

The Cost of Reacting

Every year, the research firm DALBAR publishes its Quantitative Analysis of Investor Behavior, measuring how the average investor actually performs compared to the broader market. Consistently, the findings tell the same story: investors who try to navigate the ups and downs end up worse off than those who stay put.

The 2025 edition found that the average equity investor earned 16.54% in 2024, while the S&P 500 returned 25.02% — an 848 basis-point gap. This was the second-largest gap of the past decade and the fourth-largest since DALBAR began tracking investor behavior in 1985.

Over time, these patterns compound into serious financial losses. Morningstar’s 2025 Mind the Gap report highlights this reality: for the ten years ending December 31, 2024, the average dollar invested in US mutual funds and ETFs earned about 7.0% annually, compared to 8.2% for the funds themselves. This 1.2 percentage-point behavior gap means investors forfeited roughly 15% of their total potential returns—not because of fees or poor fund selection, but because of the timing and magnitude of their own buying and selling.

On a million-dollar portfolio over that ten-year period, that gap results in finishing the decade with approximately $1,967,150 instead of $2,199,240—a loss of over $232,090. If we extrapolate this exact same behavior gap out over twenty years, the discrepancy compounds dramatically: the fund-matching portfolio would grow to approximately $4,836,656, while the average investor’s portfolio would only reach $3,869,684. That is a sacrifice of nearly a million dollars over two decades simply by trying to outmaneuver the market.

According to historical data from Hartford Funds and Ned Davis Research, the cruelest irony of market-timing is that the best days in the market almost always cluster around the worst days. Their research shows that 76% of the stock market’s best single days occurred during a bear market or within the first two months of a new bull market. Missing just the 10 best days over a 30-year period would have cut an investor's returns in half. Miss the best 30 days, and long-term returns drop by 84%. The days that feel the scariest are almost always right next to the days that matter most.

Where the Noise Comes From

If the data so clearly supports staying the course, why do investors keep making moves they shouldn’t? Because they’re surrounded by noise that’s designed to feel like a signal.

• The Financial Media: Cable news, financial websites, and market podcasts are businesses that depend on urgency. A calm market where the best advice is “stay the course” doesn’t generate clicks or ad revenue.

• Economic Reports: Jobs numbers, inflation readings, and Fed statements create a similar illusion of actionability. Although they are real data points, what they actually produce is a feeling that the landscape just shifted and you need to respond.

• Your Social Circle: This is more insidious because it feels trustworthy. The colleague who says they sold before the last downturn, or the neighbor excited about a stock that doubled. You’re never hearing the full picture — the losses they don’t mention, the trades that didn’t work. Social proof is one of the most powerful forces in psychology, and it doesn’t stop at your portfolio.

• Social Media: Platforms reward extreme conviction and punish nuance. The person calmly suggesting you hold a diversified index fund for thirty years will never get the engagement of someone calling for a crash.

• The Broader Financial Services Industry: The trading ecosystem often presents a paradox. Many brokerage platforms publish excellent content about the importance of staying the course during volatility, citing the exact same behavioral data referenced above. But often within the same week, the same platform will email you about trading upgrades, free options courses, and new charting and technical analysis tools. They’ll publish daily pre-market commentary and intraday analysis — a running play-by-play that frames the market as something you should be watching and responding to in real time. The content arm says “be patient,” while the product arm says “be active” and “stay ahead of the market.”

Why We Fall for It

Investors who react to noise aren’t foolish; they’re human. A few deeply wired tendencies are working against them.

Loss aversion means the pain of losing money is felt roughly twice as intensely as the pleasure of gaining the same amount. Recency bias compounds this — whatever just happened feels like what will keep happening, so a bad week becomes a bad year in your mind. And action bias, the instinct that doing something is always more responsible than doing nothing, pushes you toward trades that feel productive but statistically aren’t.

The DALBAR data captures these biases in motion. In 2024, investors withdrew money from equity funds in every quarter, with the largest outflows in the third quarter — right before a major rally. They sold into weakness, missed the recovery, and ended the year far behind where they would have been by simply holding.

Build the Portfolio That Lets You Ignore the Noise

Here’s the critical distinction: ignoring the noise isn’t the strategy – it’s the result. The real strategy is developing a custom investment plan and building a portfolio to match.

If you’re going to tune out daily market headlines, it helps to have a portfolio designed to function without your intervention — an all-weather portfolio built around your specific goals, time horizon, and risk tolerance.

History suggests that diversification is a key element of this approach: spreading exposure across equities and fixed income, across domestic and international markets, across market capitalizations and investment styles. A properly diversified portfolio tends to be more resilient by design — when one area struggles, another may absorb the impact.

Investors may also want to consider rooting their portfolio design in evidence — decades of data on asset class returns, correlations, risk premiums, and the documented benefits of broad diversification — rather than in speculation. One form of ongoing activity worth considering is periodic rebalancing — restoring your target allocation when market movements cause it to drift. The key is that it’s rules-based, not reactive.

When Changes Are Actually Warranted

Ignoring the noise doesn’t mean never changing your portfolio. It means the trigger for change should be your life, not the market.

Valid reasons to revisit your allocation might include:

• A meaningful change in your financial circumstances (a new job, an inheritance, a major expense).

• A shift in your time horizon (as you move closer to retirement, it may make sense to gradually reduce exposure to volatility).

• Major life events (marriage, divorce, the birth of a child, a health diagnosis).

The common thread is that each of these changes originates from within your own life, not from a news cycle.

The Noise Won’t Stop

The financial media will keep manufacturing urgency. Economic data will keep generating headlines. Your friends will keep sharing opinions. Trading platforms will keep offering tools to trade more actively. None of that is going to change. What’s in your control is whether you let it into your decision-making.

The evidence suggests that one of the most valuable things long-term investors can do is stay the course — not out of ignorance, but out of understanding. Understanding that you’ve built something designed to weather storms without your intervention.

Tad Jakes, CFP®, EA, ECA

General Information: The financial concepts, tax laws, market projections, and strategies referenced in this article reflect current regulations and publicly available data, all of which are subject to change. Financial planning and investment decisions are highly individual and depend on a wide range of personal, financial, and health-related factors. This content is intended for educational purposes only and does not constitute personalized financial, tax, or legal advice. Please consult a qualified financial advisor, tax professional, or legal counsel regarding your specific situation.

Past Performance: Past performance is no guarantee of future results. All investments involve risk, including the possible loss of principal.

Hypothetical Illustrations: The case studies and mathematical illustrations presented in this article ($1,000,000 portfolio example) are hypothetical and for educational purposes only. They do not reflect the actual trading or performance of any client account. These figures do not account for the impact of advisory fees, brokerage commissions, or taxes, all of which would significantly reduce an investor's actual returns over time.

Index Disclosure: The S&P 500 is an unmanaged index of 500 widely held common stocks. Component returns include the reinvestment of dividends. Investors cannot invest directly in an index, and index returns do not reflect management fees or transaction costs.

Diversification & Asset Allocation: Diversification and asset allocation strategies do not assure a profit or protect against loss in a declining market.

Third-Party Source Data: Information obtained from third-party sources (including DALBAR, Morningstar, Ned Davis Research, and Hartford Funds) is believed to be reliable, but its accuracy and completeness have not been independently verified.