The Costly Market Mistake Investors Make While Waiting for Dips

Yahoo Finance · 2026-10-27

Holding cash and waiting for a modest 5% pullback when the S&P 500 trades near record highs can quietly drain thousands of dollars in missed gains. For instance, investors who waited for a dip after April 15 of this year—when the S&P 500 reached a new peak following the downturn triggered by the Iran war—would still be on the sidelines today, missing a surge of more than 10% over the past six months without a single 5% correction. Market history demonstrates that expensive valuations do not necessarily translate to poor returns. A Vanguard analysis examining market performance from 1950 through 2025 revealed that S&P 500 returns following all-time highs averaged 9.5% over one-year periods, compared to 9.2% on all other trading days. Furthermore, the outperformance extended across longer horizons, with three-year returns reaching 30.2% versus 28.5%, and five-year gains registering 55.8% against 51.9%.

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Waiting for a 5% correction near the all-time high of the S&P 500 and delaying investment is actually a factor that causes investors to miss out on a bull market opportunity of over 10%. According to Vanguard research, the 1-year, 3-year, and 5-year average returns following an all-time high record were actually higher than on ordinary days. Therefore, a strategy of continuously participating in the market rather than waiting for the perfect buying timing is advantageous for long-term investment performance.

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Stock Market — Even after breaking all-time highs, the 1-year, 3-year, and 5-year average returns of the S&P 500 are higher than in normal periods, raising expectations for continuous investment inflows and upward trends.

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Following the recent shock of the Iran war, the S&P 500 index has continued its record-breaking rally, rising by more than 10% over six months without experiencing a correction of 5% or more. Historically, even when entering the market when the index was at its peak, the 1-year average return was 9.5% and the 3-year return was 30.2%, outperforming ordinary periods.

In the bullish scenario, the continuous rise of the index proves the validity of dollar-cost averaging and accelerates capital inflows, while in the bearish scenario, the psychological blow from short-term corrections following peak buying could be significant. Moving forward, volatility indicators of the stock index and Vanguard-style long-term return statistics must be continuously monitored.

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