No. of Recommendations: 8
You have to get rich only once" mentioned shortly ago here, which I interpret as ".... after that you only have to stay rich", and to heavily reduce my exposure and to increase my cash at least to the levels it was when we all really seriously were concerned about "How much longer can the bull last?"
I hear you. There have been two periods since WW2 where the S&P was essentially flat for the whole time period:
1929-1952
1969-1982
2000-2013
From that peak in 1929 to the trough in 2013 the market grew at 5% per year. From the peak in 1969 to the current price the return has been just over 7% per year.
However, there have been long periods of out performance as well. The trough to peak returns above were 9% for 1952-1969, 15% for 1982-2000, and 11% for 2013-2023. I'm not sure the current run is over yet, so it's too early to close the books on this run. Interestingly, if you only look at the Jan. 1 data point each year, the COVID recession doesn't even show up.
Essentially the S&P is roughly tracking gdp growth regardless of the starting point, unless you take the peak to trough or trough to peak as your snapshots.
What does this mean for wealth preservation? Well the first lesson is don't try to time the market. The second is to be a steady buyer throughout the roller coaster ride. The third is that maybe modern portfolio theory still has something to say to us (excepting the recent period of ultra low rates). Finally, I'd recommend that we start thinking that we are 30% less wealthy than our portfolios suggest and plan around that assumption.
