Dave Collum posted the following chart on on Twitter;
If you think about the bull market/bear market cycle, it's sort of a two steps forward one step back phenomenon. The table shows that a few times it's been two steps forward, two or more steps back. This is part of the reason why I focus so much effort on looking for and trying to mitigate large market declines (bear markets).
To fill in some gaps, read this from Lance Roberts that lays out how compounding returns are not quite what they're purported to be due to the lumpiness of returns. What that means is that even though the stock market averages 7% or 10% per year, or whatever number you find, the returns are not linear. Last year the S&P 500 was down around 4%. This year, if the market were somehow flat for the back half it would be up about 17%, maybe next year it will be up less and so on.
Returns are something we have no control over. The average annual return of the market, even taking into account Lance's work, combined with an adequate savings rate can be enough to get the job done for your retirement plan, all the moreso if you live below your means.
As a matter of investment philosophy I believe that avoiding the full brunt of large declines makes every other aspect of long term investing easier. This is something that can be in your control by virtue of being disciplined. When the S&P 500 breaches its 200 day moving average (DMA), I make at least one defensive trade. It's a process, it is not a matter of getting entirely out. Selling out completely makes it likely that you get whipsawed and even if you don't get whipsawed for what turns out to be headfake, will you be able to get back in at the bottom? Getting in at the bottom is not a bet I would want to make.
Even if you don't nimbly trade around a market event, the act of avoiding the full brunt makes you less prone to emotions and smoothing out the ride makes the withdrawal process for retirees easier.