Wouldn't all us so called Investors be far better off if stock prices fell by 10%pa than if they increased by 10%pa?
I often come across posts from investors cheering because some stock that they have $5000 in has doubled in value, and they seem to think that this has made them richer, and it has. However a rising stock prices just pushes you further away from financel freedom.
Consider this analogy,
You are a 20 year old investor who has found you can buy inner city carparks for $10,000 each and and lease them for $1,000per year. You realise that if you bought 100 carparks you could retire on $100k / year.
You think about it and realise that by regularly investing part of your wage + all rent received you could purchase 100 carparks in 25 years. So you set about buying as many car parks as you can. Two years into you plan you have 2 carparks worth $20,000 and can see how the compounded growth of reinvesting the rent will speed up your return over the years.
Then suddenly somthing strange happened, There was stories all over the media about wealth to be had in the car park market, and other investors rushed in doubling the price of car parks to $20,000 each.
At first you are glad, your net worth just doubled from $20,000 to $40,000 and it seems you are richer than ever, you happily delight your friends with stories of you quick fortune.
But you soon relise that the carparks still only provide a dividend of $1000pa, and you still have 98 more carparks to buy at the new price of $20,000 each till you can retire on the earnings, your dream of owning 100 by age 45 is now impossible.
Surly it would be much better for if the price of carpark got lower and lower rather than higher and higher. Should they drop to $5000 each you should be laughing cause it just knocked 12years off your investment plan
The lower the price of the investment becomes the faster you will be able to own enough to retire on.