We’re really within 3% of the prior peak for stocks in November 2021.
Posted on March 8, 2024

We’re within 3% of the inflation-adjusted peak for stocks in November 2021. This is a sharp change from my post at the two-year mark, when I concluded we had to see a real increase of 25% to get back to that peak. Wow. I’m encouraged that we may put that -23% real decline in 2023 behind us. That was the sixth worst calendar-year decline since 1926 and the third worst in my lifetime. If we put that peak from 2 1/3 years ago behind us, this will be one of the fastest recoveries for stocks from a year of steep decline.

== Details of the 4% ==

I use S&P Global’s index for Total US Stocks. I use the index for Total Return. I use the peak on November 8, 2021. The index, without adjusting for inflation is now more than 9% above that. But we’ve had ~12% inflation. When I adjust, we are less than 3% below the peak, and we have to have a real increase of less than 3% to surpass it.

== Implications for our SSA ==

We might calculate to a real increase in our Safe Spending Amount when we recalculate at the end of this year (SSA, Chapter 2, Nest Egg Care). I previously thought this would be IMPOSSIBLE. Real stock returns were more than +8% in November, and US stocks are up another than 13% from December.

I calculate our real portfolio return since December 1 at 8.7%. Patti and I need a ~19% real portfolio return for our calculation year (December 1 – November 30) to calculate to a real increase in our SSA next Nov 30 or Dec 1. (You can follow my calculation to find the ~19% that we need here.) +10 percentage points more from where we are now is not impossible.

Your SSR%s are different than ours and your mix of stocks and bonds may be different from ours. But my conclusion is that you also will be close to calculating to a real increase in your SSA at the end of this year if stock returns are +10% over the next nine months.

Conclusion. We’ve had a steep climb for stocks since early November. The outlook for our portfolio is very different than my look then. We are now just 3% in real return from surpassing the prior market peak in November 2021. If we can pass it and put it behind us, this will be one of the fastest recoveries from a steep annual decline in stocks.

The performance over the last four months gives me some hope of calculating to a real increase in our Safe Spending Amount the next time I calculate on December 1. Patti and I need less than 10% real portfolio return for the balance of this year to calculate to a real increase. 10% will put you in the ball park of calculating to a real increase in your SSA.