The average investor put money back into the market in January and was able to outperform the S&P over the first two months of 2019.

But this “recovery” wasn’t enough to mitigate their losses in the second half of 2018 and “fell far short of what a buy-and-hold strategy would’ve yielded,” according to “Holders vs. Sellers,” a new research report Dalbar released today.

The average equity fund investor lost twice as much as the S&P in 2018—nearly 9.5 percent—said Dalbar, a leading investor behavior research firm.

Now, investors are buying again for only the fourth month out of the last 20. The average investor bought into an 8 percent advance of the stock market in January and were able to outperform the S&P 500 by 0.57 percent.

However, a pat on the back may not be in order, according to Dalbar’s chief marketing officer, Cory Clark.

“The average investor may be feeling like they successfully timed the market this time. After all, they sold during the horrible month of December and bought during the recovery of January,” Clark said.

In effect, however, “the average investor lost a significant portion of their portfolio value in the second half of 2018, and January’s gains served only as a numbing agent to hide the sting that lies beneath,” Clark said.

The view that market timing works can only perpetuate emotional investing and lead to devastating effects, he said.

“These last six to eight months have been a silent killer of an investor’s portfolio,” Clark added. “This is a time where the average investor really needs coaching and perspective from a trusted expert.”

A combination of volatile market conditions and bad investor timing caused the average U.S. investor to lose 9.42 percent over the course of 2018, compared with a significantly smaller 4.38 percent retreat by the S&P, the company found.

In fact, investors were net withdrawers of funds in 2018 and lagged the S&P “in good times and bad,” according to Dalbar.

In October 2018, a bad month, the S&P return was negative 6.84 percent, while the average equity investor return was negative 7.97 percent, Dalbar reported.

In August, a good month, the S&P return was 3.26 percent, while the average equity investor return was 1.8 percent.

“Judging by the cash flows we saw, investors sensed danger in the markets and decreased their exposure, but not nearly enough to prevent serious losses,” Clark said.

“Unfortunately, the problem was compounded by being out of the market during the recovery months,” he said. “As a result, equity investors gained no alpha and, in fact, trailed the S&P by 504 basis points.”

Since 1994, Dalbar has been analyzing investor returns based on aggregate cash-flow data from U.S. mutual funds.

According to its research, the average investor consistently earns “much less” than market indices suggest.

In fact, year after year, the firm has found that investors are often their own worst enemy, failing to exercise the necessary discipline to capture the benefits markets can provide over longer time horizons, while succumbing to short-term strategies such as market timing or performance chasing as they did in 2018.