Chapter 6. Sequence of Investment Returns
“...The mutual fund I own earned 9% during the last ten years, so I am obviously much better off than my neighbor whose fund only earned 8% over the same period....”
The ancient biblical story of Joseph and Pharaoh tells of a famous dream of the king in which the land of Egypt was prophesized to experience seven years of plentiful harvest and seven years of horrible drought. And as the book Genesis goes on to tell, this scenario actually played itself out over an agriculturally volatile 14-year period. In fact, some biblical commentators claim that in this story, Pharaoh was actually given a choice of which sequence he wanted to experience first, the seven good years or the seven bad years. ...