One of the market’s worst performing stocks over the past year was, not long ago, one of its best. Novo Nordisk is the Danish company that pioneered the hugely popular weight-loss drug Wegovy, also known as Ozempic. After it hit the market in 2021, the company’s stock rallied, tripling over the following three years. Since then, however, things have been far more challenging. Over the past 12 months, the stock has dropped 60%.

This story highlights a key challenge for investors: On the one hand, picking stocks can sometimes be as easy as it looks. That was the case initially with Novo Nordisk. When Ozempic hit the market, it was clear the company had a winning formula. Patients were routinely losing as much as 20% of their body weight. Sure enough, positive financial results followed. An investor who chose to bet on this trend would have been right.

But if stock-picking can be this straightforward, why does it often turn out to be so hard? Decades of data tell us that it’s enormously difficult, even for professional fund managers, to beat the market. Why is that?

Recent research sheds light on this question. In a study of more than 20,000 mutual funds over a 35-year period, researchers found that fund managers actually do a reasonably good job at picking stocks. But that turns out to be only half the battle. When it comes to timing decisions, fund managers struggle. In nearly every geography and every time period, timing decisions subtracted value. Stock-pickers, in other words, are good at picking stocks but not very good at deciding when to buy or sell them. A closer look at Novo’s recent history can help us see why this is often such a challenge.

For Novo Nordisk—despite its early success with Wegovy—everything seemed to go wrong at the same time.

First came competition from entities known as compounding pharmacies, which were able to capitalize on a quirk in the law. Under FDA rules, if an important medication is deemed to be in short supply, these independent pharmacies are permitted to manufacture knockoffs to help ease the shortage. These custom-made versions are based on the same active ingredients as the branded drug but are usually sold at much lower prices. This was the situation Novo Nordisk faced—and is still facing. Because of Ozempic’s quick success, the company had a hard time keeping up with demand. As a result, in 2022, the FDA allowed compounding pharmacies to begin producing knockoffs.

In the years since, Novo worked to expand its manufacturing capacity, and earlier this year, the government declared that the shortage was over. That meant that compounding pharmacies should have stopped producing their lookalike weight-loss drugs. They haven’t followed the rules, though, and Novo has had a hard time shutting them down. According to a recent press release, Novo Nordisk has filed more than 130 lawsuits, but it continues to be an uphill battle. In one recent case, a judge dismissed Novo’s claim against a compounder, arguing that no patients had been harmed by the knockoff it produced.

Compounders were just the first of Novo Nordisk’s problems. Then came competition from a brand-name drug company, Eli Lilly. It released its own, very similar, weight-loss drug in late-2023, putting additional pressure on Ozempic’s market share. Worse yet, Lilly has been working on a pill version of its drug. This would be a significant advancement over existing treatments, all of which require injections, something that’s off-putting to many people.

The combined effect: Since hitting a peak last summer, Novo shares have lost substantial value, and the outlook is far from clear. If you’d been an investor in Novo Nordisk over the past five years, in other words, you might have made a terrific profit. Or, depending on the timing, you might instead have realized a significant loss.

Stories like this are hardly unique. Consider Microsoft. In the roughly 40 years since it went public, its stock has dramatically outperformed. In round numbers, it’s gained about one million percent. But it hasn’t been profitable every year. In fact, if you’d held the stock over the 14-year period when Bill Gates’s successor, Steve Ballmer, ran the company, you would have realized an 8% loss, even including dividends.

Meta, the company formerly known as Facebook, went through something similar not long ago. When CEO Mark Zuckerberg announced that the company was shifting its focus to the “metaverse,” its stock took a dive, losing more than 60% of its value in 2022. When the company later backed away from the metaverse and instead started focusing on AI, its stock turned around and is up nearly eight-fold over the past three years. Just as with Microsoft, you might have done very well or very poorly with this stock depending on the timing.

The most recent example: Tesla. For a variety of reasons—possibly including Elon Musk’s personal unpopularity—car sales have been sliding. The result: Earlier this year, the stock was down nearly 50%. It’s still down, though less so. What’s next for Tesla shares? It’s an open question.

That brings us back to Novo Nordisk. No doubt, it’s a great company. All of the stock-pickers who recognized the potential of its weight-loss products could see that. But the outlook is entirely unclear. On the one hand, it’s working on its own pill-based version of Ozempic, to better compete with Lilly and leave the copycats behind. But at the same time, science advances every day. One recent headline read “Scientists May Have Identified a Natural Alternative to Ozempic.” Is there validity to that claim? It’s too early to tell.

The bottom line: Stock-picking is tricky because it can sometimes look easy, and that obscures the hard part, the timing. That’s why Warren Buffett has often joked that his favorite holding period for a stock is “forever.” But that’s easier said than done.

The alternative? As you might guess, I see this as another reason investors are generally well served by index funds, which hold stocks through thick and thin, unaffected by the headlines of the day.​