Nobody wants to try to catch falling knives by buying into the market during a crash, but if you promised yourself to wait until the market stabilized before you decided to jump back into stocks, it's crunch time. Do you have the guts to follow through on that promise?

Smart investors know that you can't guess exactly when the market has hit rock bottom. But after hitting the lowest levels in more than a decade earlier this month, stocks have rebounded more than 20% in just two weeks. And now, you're probably asking yourself: Do I feel any better about investing today than I did 14 days ago?

The flaw of waiting for a rebound
Now don't get me wrong. I'm all in favor of simple rules for investing in stocks. I have only one requirement that those rules have to meet: They have to make sense.

Unfortunately, the "wait until stocks recover" argument for getting back into the market doesn't meet the common-sense test. Here are some reasons why:

  • Even with the overall market up sharply, many stocks have jumped even more dramatically. Citigroup (NYSE:C) shares, for instance, have tripled since March 6, while Wells Fargo (NYSE:WFC) has doubled. Hopes for the government's plan to buy up toxic mortgage-related assets from banks have bolstered financial stocks. But why would you want to give up half or two-thirds of your gains waiting until after some catalyst drives up share prices -- especially when the news isn't that big of a surprise?
  • Similarly, thinking a business will look more attractive when it costs more has always seemed counterintuitive to me. You'd think that as shares got more expensive, you'd be less inclined to invest, not more -- you'd add fears of overvaluation to the other concerns you already had.
  • Last, but perhaps most importantly, you're never going to be absolutely sure that the bottom is in. If you routinely wait until the market rises 10% to 20% or more before you buy, then you're going to get hit hard when the market's move proves to be a head fake.

Especially with that last point, investors don't have to look too far back in time to see a great example.

The rebound that wasn't
On Nov. 20, the S&P hit lows it hadn't reached in more than 10 years. Yet just five days after that, the market had rebounded very close to 20%, and many believed the low was in.

Unfortunately, if you bought at those levels, your success proved short-lived. After bouncing around for the rest of the year, the market headed sharply down at the beginning of 2009. And when stocks hit fresh lows, those who'd bought at those temporary highs took some pretty serious hits:

Stock

Return Nov. 20-28

Return Nov. 28 to March 9

American Express (NYSE:AXP)

35.3%

(54%)

ArcelorMittal (NYSE:MT)

52.6%

(23.2%)

International Paper (NYSE:IP)

20.1%

(63.5%)

Simon Property Group (NYSE:SPG)

22.9%

(38.4%)

Wynn Resorts (NASDAQ:WYNN)

27.4%

(60.9%)

Source: Yahoo! Finance.

As you can see, even though those who bought right at the Nov. 20 lows have also lost money, you can see just how much bigger the losses are if you had waited.

Wait now?
So does that mean if you waited until now, you shouldn't buy? On the flip side of the argument, if this is the beginning of a more significant rebound, you won't want to miss out on it.

Really, the flaw is in the whole premise of waiting. Once you concede that there's no way to be sure whether or not the market will keep falling, it makes more sense just to buy measured amounts at regular intervals. You won't necessarily get the best prices that way, but you will guarantee that when the market has a great day like Monday, you won't be watching from the sidelines.

So if you waited for a rebound, realize that you made a mistake in trying to time the market. But don't let it stop you from getting on the right path now, by starting a regular investing plan. Over the long haul, by taking your focus away from day-to-day moves in the market, a plan will make you not only more confident but also bring you better returns.

For more about surviving the financial crisis:

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Fool contributor Dan Caplinger has stuck with his plan. He owns shares of ArcelorMittal. American Express is a Motley Fool Inside Value recommendation and the Fool owns shares of American Express. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy keeps its promises.