Managing your own expectations is a big part of your investment planning process. We’ve all heard about “buy-and-hold” investing and why it doesn’t really matter what the market’s doing when you get in, as long as you stay in. And there’s a great deal of truth to that thinking.

Studies show that stocks can grow (on average) up to 10 to 12 percent annually, and bonds can grow up to six to eight percent for longer term Treasuries. Compound interest (your accumulated investment returns rolled over year after year), a long-term outlook, and a  disciplined investment strategy can yield big bucks over decades.

The trick for buy and holders is in staying in the markets so they don’t miss its sharp upticks—money that’s hard to make back. While market-timers, on the other hand—those Wall Street daredevils who weave in and out of the financial markets to try and capture the most  optimal moments—risk missing those market spikes.

Market timers also tend to experience higher transaction costs than their buy and hold counterparts. That’s because every time they buy or sell securities, they incur transaction costs. Even if they achieve above average returns, these costs could be counterproductive.

It becomes obvious, then, that trying to time the market can be risky. Between 1962 and1991, for example, a buy-and-hold strategy was best. Those investors buying common stocks in 1962 would have had returns of 10.3 percent. If those same investors, however, tried to time the market, they’d have missed just 12 of the best performing months. And their returns would have been only 5.4 percent.

There are also tax reporting complications associated with market-timing techniques. Going in and out of the market several times in one tax year (sometimes several times in a month) generates numerous taxable gain and loss transactions. All of which must be accounted for on the investor's income tax return.

So why try to jump in-and-out and time the market? It's high maintenance, complicated, tax-disadvantaged, and the performance of your portfolio suffers.

Hey, other than that, it works just great.