Okay, don't higher returns while in the accumulation stage result in getting to the point of no longer buying (FIRE, retirement, etc.) more quickly? I guess I don't understand the concern over the good returns most of us have seen recently, especially last year. If you needed to accumulate more assets (as a result of lower investment returns), that would less concerning to you?
My concern with elevated returns is a regression to the mean. For those of us nearing retirement and looking at a withdrawal rate based on historical stock market returns, a multi-year correction is scary. Poor market performance in the early years of retirement is what puts you into the part of the rich/broke/dead chart where you aren’t rich or dead.
It FEELS bad, but I’m not sure that it is bad, or just a cognitive bias. Like we just saw heads come up 27 times in a row, and thinking that next time it MUST be tails, when really it’s still 50/50.
Let me remind everyone what a scary market we endured in 1Q2020. My returns in my TSP for the first three months of 2020 were around -22.27%. I know many people who freaked out and moved to cash, and I just kept contributing to the C, S, and I funds.
Also, my non-annualized total returns from January 1, 2020 to March 31, 2021 were ~36.49%. That's a nice number, but it's not 66.61% either.
Obviously by most traditional measures, the stock market is richly valued right now, most likely anticipating large pent-up demand for travel, eating out, bar-hopping, watching movies, hearing live music, watching theater, and the larger economy. But that doesn't mean we'll necessarily see a huge drop. Perhaps the market will stagnate or even rise very slowly. Since I cannot successfully predict the market and am still in the accumulation phase, I just keep buying AKA dollar cost averaging.