$14,370 $3,189 PROOF ONLY - DST Systems
HISTORY OF THE FINANCIAL MARKETS
ANNUALIZED RETURNS THROUGH 12/31/11
Inflation Large-Cap U.S. Stocks Small-Cap U.S. Stocks Investment-Grade Bonds Cash
1-Year
2.96% 2.12% 1.02% 7.87% 0.11%
5-Year
2.17% 2.29% 4.65% 5.80% 2.49%
10-Year
2.33% 1.41% 7.66% 5.84% 2.41%
30-Year
3.15% 10.72% 11.79% 8.92% 5.29%
Since 1926
2.99% 9.93% 11.91% 5.25% 3.72%
ANNUALIZED RETURNS THROUGH 12/31/11
Broad U.S. Stocks Foreign Developed Emerging Markets
1-Year
1.10% -11.74% -18.17%
5-Year
3.01% 2.94% 13.11%
10-Year
2.56% 3.94% 16.23%
30-Year
10.54% 9.70% 11.25%
Since 1926
-- -- --
1920s
House
Senate 5%
COOLIDGE HOOVER
Federal
Deficits/Surpluses as a % of GDP
0%
1930s
ROOSEVELT
1940s
TRUMAN
1950s
EISENHOWER
1960s
KENNEDY JOHNSON
NIXON
1970s
FORD
CARTER
1980s
REAGAN
1990s
BUSH
CLINTON
Federal deficit $290 billion
-5% -10% -15%
$10,000
? Top federal tax rate raised from 25% to 63%
? Top federal tax rate raised from 63% to 91%
? Banks and stock markets close for 9 days
? Social Security Act passed
? Pearl Harbor ? World War II ? D-Day ? Germany surrenders ? Japan surrenders
? Korean War
? Number of mutual funds exceeds 100
? First international mutual fund available in U.S.
? Suez Canal Crisis
? Sputnik
? Berlin Wall ? Bay of Pigs ? John Glenn orbits the earth ? JFK assassinated ? MLK assassinated ? Civil Rights Act passed ? Vietnam War ? Neil Armstrong is the first
person to walk on the moon
? Nixon visits China ? Nixon resigns ? Nasdaq opens ? Arab oil embargo ? IRAs introduced ? Chrysler bailout
? Top federal tax rate cut from 70% to 28%
? Iran hostages released ? IBM PC introduced ? S&L deregulation ? 30-year fixed mortgage
rate 18.63% ? Markets crash ? Berlin Wall comes down
? Top federal tax rate raised from 28% to 39.6%
? Persian Gulf War
? Mutual fund assets top $1 trillion
? First terrorist attack on the World Trade Center
? Asian currency crisis
? Russian debt default
? Long-Term Capital Management bailed out
$1,000
Bear Market
Start
# of Months
Sept. 1929 33
Mar. 1937 63
May 1946 37
Aug. 1956 15
Dec. 1961
7
Feb. 1966
8
Nov. 1968 18
Jan. 1973 21
Nov. 1980 21
Aug. 1987
3
Jul. 1990
3
Mar. 2000 31
Oct. 2007
17
Decline (%) -86 -60 -30 -21 -28 -22 -36 -48 -27 -34 -20 -49 -57
Subsequent Bull Market (through 12/31/11) 450%
Start
# of Months Increase (%)
Jun. 1932 58
322
Apr. 1942
50
158
400% S&P 500 BULL & BEAR MARKETS
350%
Jun. 1949 87
266
300%
Oct. 1957
50
86
250%
Jun. 1962 Oct. 1966 May 1970 Oct. 1974 Aug. 1982 Dec. 1987 Oct. 1990 Oct. 2002 Mar. 2009
1928 1929 2010 2011
PROOF 44
80
26
48
32
74
75
126
61
229
32
65
115
417
61
101
Ongoing
86
200% 150% 100% 50%
0% -50% -100%
1930s 1940s
1950s 1960s 1970s 1980s 1990s 2000s
ONLY
$100
A Bear Market is defined as the index closing at least 20% down from its previous high close. Its
A Bull Market is measured from the lowest close reached after the
duration is the period from the previous high to the lowest close reached after it has fallen 20% or more. market has fallen 20% or more to the next high.
2000s
Record federal BUSH
surplus $236 billion
? Top federal tax rate cut from 39.6% to 35%
? 9/11 ? Enron bankruptcy ? First iPhone ? Iraq War ? WorldCom bankruptcy ? Subprime crisis
2010s
OBAMA
Record federal deficit $1.56 trillion
? Flash crash ? Wall Street reform act ? European debt crisis
$14,370
? Bear Stearns collapse
? Multiple bankruptcies including Lehman Brothers, GM, and Chrysler
? $700 billion bailout passed
$3,189
$84
$22
$13
$10
11/11
Price of Gold
2/08
1,746.00
Price of Gold
971.50
$1
40 20% 30 15% 20 10%
1928 Unemployment 5.02%
1926 Life Expectancy F: 62.7 M: 59.1
1930 Price of Oil
1.88
1934 Unemployment 21.30%
1935 Price of Gold 35.00
1935 Population over 65 6.1%
1940 Unemployment
14.60%
1950 Population over 65 8.1%
12/49 Unemployment 6.60%
1950 Life Expectancy
F: 72.0 M: 66.3
S&P 500 Price/Earnings Ratio
1957 Price of Oil
3.09
1968 Price of Gold
39.31
1963 Median Home Price
$18,000
12/69 Unemployment
3.50%
1/80 Price of Gold
653.00
2/85 Price of Gold
287.75
1981 Price of Oil
31.77
1973 Price of Gold
97.39
1977 Population over 65
9.8%
1980 Life Expectancy
F: 78.2 M: 70.8
1977
1974 Price of Oil
Median Home Price $48,800
6.87 OPEC Crisis
12/82 Unemployment
10.80%
1987 Median Home Price
$104,500
30-Year Treasury
1996 Median Home Price $140,000
12/98 Price of Oil 10.82
12/01 Price of Gold
276.50
12/04 Price of Oil 43.36
2004 Life Expectancy F: 80.8 M: 75.7
12/00 Unemployment
3.90%
6/08
Price of Oil
145.31
11/11
Price of Oil
2007 Median Home Price
102.59
$247,900
2010
Median Home Price
$221,800
12/08
Price of Oil
2011
30.28
Population
over 65
12/09
12.4%
Unemployment
10.00%
12/11
Unemployment
8.50%
10 5% 0 0%
Prime Rate
Discontinued
Continued
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Sources: Inflation: Represented by the change in the Consumer Price Index. Large-Cap U.S. stocks: Represented by the S&P 500 index. Small-Cap U.S. stocks: Represented by a composite of the CRSP 6th-10th decile portfolios and the S&P SmallCap 600 index. Investment-Grade bonds: Represented by a composite of returns on long-term government bonds (derived from yields published by the Federal Reserve), the Barclays Long-Term Government Bond index, and the Barclays U.S. Aggregate Bond index. Cash: Represented by a composite of yields on 3-month Treasury bills, published by the Federal Reserve, and the Barclays 3-Month Treasury Bills index. Broad U.S. stocks: Represented by the Wilshire 5000 index. Foreign Developed stocks: Represented by the MSCI Europe, Australasia, and Far East (EAFE) index. Emerging Markets: Represented by a composite of the S&P/IFCG index and the MSCI Emerging Markets index. Commodities: Represented by the S&P/Goldman Sachs Commodities index. Bear/Bull Markets: Bear markets are defined as a drop of 20% or more from a peak value of the S&P 500 index, and are measured from the peak of the market to the bottom of the market. Bull markets are measured from the market low to the next peak. Prime Rate and 30-Year Treasury Yield: The Federal Reserve; U.S. Census. S&P 500 Price-Earnings: Represented by the ratio of the real price of the S&P 500 index to the average real earnings of the S&P 500 index over the preceding 10 years. Life Expectancy, Population Over 65, and Median Home Prices: U.S. Census. Price of Gold: Based on the 4 p.m. London Fix. Prices prior to 1978 are annual averages. Oil Prices: U.S. crude oil, first purchase price, annual average (prior to 1986); West Texas crude spot price (1986 and later). Unemployment: Bureau of Labor Statistics. Federal Deficit/Surplus: Bureau of Economic Analysis. ? 2012 S&P Capital IQ Financial Communications. All rights reserved. A reference to a particular company is not a recommendation to buy, sell, or hold its securities. S&P does not guarantee the accuracy, adequacy, or completeness of the data contained in the chart and therefore is not subject to liability for errors or omissions.
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