As a bull market proceeds, people's portfolios swell. These investors, seeing the size of their portfolios, then decide to retire at or near the top of a bull. After a long bull market future expected returns are lower and the potential for reversion to mean is high. People retire, then subject themselves to terrible sequence of returns risk at the worst time, early retirement. The sequence of returns early in retirement is crucial to a financially successful retirement. People who retire when valuations are high are most exposed to this risk.
Why am I posting this ?
The past bull market of the last 10 years has really fuelled he FIRE(Financial Independence and Retire Early) movement. I think it is time to remind all the FIRE aspirees about the Murphy's law of retirement.
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