$500 a month in the S&P 500 since 1993. In total, $202,000 out of your own pocket over the years. Two very different ways to invest that money: whoever bought every single time, the same day of every month, no exceptions, ended up with $1,842,747. Whoever kept the money on the sidelines waiting for a 20% crash to go all in ended up with $1,333,500. Half a million dollars of difference — and not because of getting the crashes right or wrong, but because of something much more subtle.
The two strategies, head to head
- Dollar-cost averaging (DCA) — $500 on the same day every month, no matter what happens, without looking at the price or the context
- Waiting for crashes — the money piles up in cash until the S&P 500 drops 20% from its peak; then it all gets invested at once
With the same total capital contributed ($202,000), over the same period (since 1993), the final result differs by more than half a million dollars in favor of whoever simply bought every time.
It wasn’t about getting the crashes right or wrong
Here’s the most surprising part: the investor waiting for crashes didn’t fail to spot them. They went all in 16 times with all the capital accumulated up to that point, including notable crashes like March 2001 and March 2020. They correctly identified the 20% drops. That wasn’t the problem.
Their September 2011 purchase was made at $87. The next 20% crash didn’t arrive until March 2020 — eight and a half years later — and they bought at $226. In other words, they ended up buying “cheap” at two and a half times the price of their previous purchase. During all that time, the money simply sat idle: 97% of the days, that capital wasn’t invested anywhere.
Why time out of the market weighs so heavily
The S&P 500 doesn’t move in 20% crashes on any regular or predictable schedule. There can be several within a few years, or nearly nine years can go by without a single one — as happened between 2011 and 2020. While you wait for that “perfect” crash to enter, the market keeps rising, generating dividends, reinvesting them, compounding. Whoever is waiting in cash misses out on all of that growth.
The opportunity cost of being out of the market, even “just” waiting for the ideal entry point, turns out to be bigger than the benefit of buying cheaper once the crash finally arrives.
It’s not about having picked the wrong dates
The most compelling part of this exercise is that the result doesn’t depend on 1993 being chosen as the starting point by chance. Periodic contributions win starting in different years (1993, 2000, 2003, 2007, 2010, or 2015) and waiting for different crash thresholds (5%, 10%, 15%, 20%, or 30%) — even if that idle cash had earned a 5% return while it waited.
When a result holds up across different starting dates and different crash thresholds, it stops being an anecdote and starts being a structural trend. This doesn’t mean “waiting for crashes” is always a bad idea in every scenario — it means the cost of staying out of the market for years, hunting for the perfect moment, tends to outweigh the benefit of buying cheaper once the crash finally arrives.
Time in the market, not timing the market
This is the version with concrete numbers of the phrase repeated so often in investing: “time in the market beats timing the market.” Contributing systematically, without trying to guess the best moment, removes the risk of staying out of the market for years waiting for a signal that can take much longer to arrive than you’d imagine.
This connects directly to the exercise we looked at on investing in the Nasdaq right before the dot-com bubble: in both cases, what separates the final result isn’t nailing the perfect entry point — it’s the ability to stay invested (or keep contributing) with discipline for long enough.
Past performance does not guarantee future returns. This exercise uses real historical S&P 500 data to objectively compare two methodologies, but it’s not a suggestion that you should invest one way or the other. The goal is purely educational: understanding the opportunity cost of waiting for the perfect moment versus the discipline of contributing systematically.
Conclusion
With the same total capital contributed, buying every time — without thinking, without waiting, without trying to guess the bottom — generated half a million dollars more than patiently waiting for 20% crashes to go all in. And the key wasn’t getting those crashes right or wrong — it was the almost invisible cost of having the money sit idle 97% of the days while waiting. The lesson of this exercise isn’t that “waiting for crashes” is absurd, but that the price of excessive patience tends to be much higher than it looks at first glance.
