Why We Do Not Chase the Market (And What We Do Instead)

The Allure of Market Timing

Every investor has felt the urge. Markets are falling, the news is dire, and the instinct to sell everything and wait for calmer waters feels not just reasonable but responsible. Conversely, when markets are surging, the pressure to pile in before missing more upside can be overwhelming.

The problem is simple: market timing requires being right twice. You need to know when to exit and, more critically, when to re-enter. Academic research spanning decades has consistently shown that even professional investors fail to time markets reliably. A study from Dalbar found that the average equity fund investor underperformed the S&P 500 by roughly 3.5 percentage points annually over 30 years, largely due to mistimed entries and exits (Dalbar QAIB, 2024).

Missing just the 10 best trading days over a 20-year period can cut your total return in half. And those best days often cluster near the worst days, making it nearly impossible to capture one while avoiding the other.

What We Do Instead

At Primaris, we do not try to predict where markets are going tomorrow or next quarter. Our approach is built on asset allocation, the decision that research has long shown drives most of a portfolio's long-term behavior. We develop allocations through our own ongoing economic and market research, weighing risk and reward across asset classes rather than chasing individual predictions or headlines.

Every client portfolio is governed by a written Investment Policy Statement shaped by your goals, time horizon, income needs, and tolerance for risk. That document, not the day's news, determines how your money is managed. It sets target allocations and the ranges around them, and it gives both of us something steadier than emotion to act on when markets get loud.

From there, discipline does the work. We monitor portfolios continuously and rebalance when allocations drift beyond their ranges. Rebalancing is the quiet engine of the whole approach: it forces us to trim what has run up and add to what has lagged, which is the opposite of what instinct begs for in the moment.

The Difference in Practice

Consider a sharp equity rally. A market chaser sees the gains and adds more stock exposure near the top. Our discipline does the reverse: as equities run past their target range, rebalancing trims them back and banks the gains into the lagging side of the portfolio. In a downturn, the same rule has us buying equities when they are cheap relative to plan, not selling them in a panic.

This allocation-driven discipline has several advantages over market timing:

1. It does not require predicting the future. It responds to where your portfolio actually is relative to your written plan.
2. It makes incremental adjustments rather than binary all-or-nothing decisions.
3. It is transparent. Every trade can be traced back to your Investment Policy Statement, not to anyone's hunch.
4. It removes emotional decision-making from the process.

Staying Invested, Staying Disciplined

The most important investment decision most people make is not which stock to buy or when to sell. It is staying invested through periods of discomfort. Our job is to construct portfolios that are resilient enough across different market environments that our clients can maintain their investment discipline when it matters most.

We do not promise to avoid every drawdown. No honest advisor can. But we believe that disciplined, research-grounded asset allocation produces better long-term outcomes than trying to guess when the next downturn will arrive or end.

If you want to learn more about how allocation-driven portfolio management works in practice, schedule a consultation to discuss your specific situation.