Long term returns for key U'S' asset classes

1
Long term returns for key U.S. asset classes

• Large Company Stocks
• Small Company Stocks
• Long Term CorporateBonds

2
Long Term Returns

• Asset Class Average Return
• 1926 - 2006
• U.S. Small Company Stocks 12.7
• U.S. Large Company Stocks 10.4
• U.S. Long Term Corporate Bonds 5.9

3
Value of 1000 invested

• Long Term Value of 1000 after
• Return 5 years 10 years 20 years
  
• U.S. Small Company Stocks 12.7 1818
  3306 10926
• U.S. Large Company Stocks 10.4 1640
  2690 7234
• U.S. Large Company Bonds 5.9 1332
  1774 3147

4
Growth in large co. stocks vs large company bonds

• Long Term Growth in 1000 after
• Return 5 years 10 years 20 years
  
• U.S. Large Company Stocks 10.4 640
  1690 6234
• U.S. Large Company Bonds 5.9 332
  774 2147
• Difference in growth 1.7x 1.9x
  2.2x 2.9x

5
U.S. Large Company Stocks

• Returns from 1926 2006
• Morningstar Stocks, Bonds, Bills and Inflation
  Yearbook

6
Asset class U.S. Large Company Stocks Time
period 1926 - 2006 Returns for 1 year
Best return 54 Worst return -43 Gap between
bestand worst returns 97
7
Asset class U.S. Large Company Stocks Time
period 1928 - 2006 Average annual returns for 3
years
Best return 31 Worst return -27 Gap between
bestand worst returns 58
8
Asset class U.S. Large Company Stocks Time
period 1930 2006 Average annual returns for 5
years
Best return 29 Worst return -13 Gap between
bestand worst returns 42
9
Asset class U.S. Large Company Stocks Time
period 1936 - 2006 Average annual returns for
10 years
Best return 20 Worst return -1 Gap between
bestand worst returns 21
10
Asset class U.S. Large Company Stocks Time
period 1940 - 2006 Average annual returns for
15 years
Best return 19 Worst return 1 Gap between
bestand worst returns 18
11
Asset class U.S. Large Company Stocks Time
period 1945 - 2006 Average annual returns for
20 years
Best return 18 Worst return 3 Gap between
bestand worst returns 15
12
10 year periods when U.S. Bonds beat U.S. Stocks
(1936 2006)

• 10 year period Return on U.S. Return on
  U.S. large
• ending corporate bonds
  company stocks Difference
• 1935 7.1
  5.9 1.2
• 1937 6.5
  0.0 6.5
• 1938 6.9 -
  0.9 7.8
• 1939 6.9
  - 0.1 7.0
• 1940 6.5
  1.8 4.7
• 1941 7.0
  6.4 0.6
• 1974 2.1
  1.2 0.9
• 1979 6.2
  5.9 0.3
• 1991 16.3
  15.3 1.0

13
Average returns on large company stocks (1926
2006)

• Time period 1 Year 5 Years
  10 Years
• Return Gains Losses Gains Losses
  Gains Losses
• Under 5 3 4 8 5 6 2
• 5 9 7 9 12 2 20 -
• 10 14 7 5 18 3 17 -
• 15 19 8 1 19 - 25 -
• 20 24 10 1 9 - - -
• Over 25 22 4 1 - - -
• Total 57 24 67 10 69 2
• of periods with
• positive return 70 87 97

14
Average returns on Large Company Stocks (1926
2006)

• 1 Years 5 Years
  10 Years
• Gains Losses Gains Losses
  Gains Losses
• Average Gain / Loss 23 (12) 13 (6) 12
  (1)
• Best / worst return 54 (43) 29 (12) 20
  (1)
• Best / worst period
• From 1933 1931 1995 1928
  1949 1929 To 1999
  1932 1958 1938
• Value of 1000 at
• end of period 1539 567
  3511 514 6223 915

15
U.S. Small Company Stocks

• Returns from 1926 2006
• Morningstar Stocks, Bonds, Bills and Inflation
  Yearbook

16
143
Asset class U.S. Small Company Stocks Time
period 1926 - 2006 Returns for 1 year
Best return 143 Worst return - 58 Gap between
bestand worst returns 201
17
Asset class U.S. Small Company Stocks Time
period 1928 - 2006 Average annual returns for 3
years
Best return 71 Worst return -47 Gap between
bestand worst returns 118
18
Asset class U.S. Small Company Stocks Time
period 1930 - 2006 Average annual returns for 5
years
Best return 46 Worst return -28 Gap between
bestand worst returns 74
19
Asset class U.S. Small Company Stocks Time
period 1935 - 2006 Average annual returns for 10
years
Best return 30 Worst return -6 Gap between
bestand worst returns 36
20
Asset class U.S. Small Company Stocks Time
period 1940 - 2006 Average annual returns for 15
years
Best return 23 Worst return -1 Gap between
bestand worst returns 24
21
Asset class U.S. Small Company Stocks Time
period 1946 - 2006 Average annual returns for 20
years
Best return 20 Worst return 6 Gap between
bestand worst returns 14
22
U.S. Long Term Corporate Bonds

• Returns from 1926 2006
• Morningstar Stocks, Bonds, Bills and Inflation
  Yearbook

23
Asset class U.S. Long Term Corporate Bonds Time
period 1926 2006 Returns for 1 year
Best return 43 Worst return - 8 Gap between
bestand worst returns 51
24
Asset class U.S. Long Term Corporate Bonds Time
period 1928 - 2006 Average annual return for 3
years
Best return 22 Worst return - 4 Gap between
bestand worst returns 26
25
Asset class U.S. Long Term Corporate Bonds Time
period 1930 - 2006 Average annual returns for 5
years
Best return 23 Worst return -2 Gap between
bestand worst returns 25
26
Asset class U.S. Long Term Corporate Bonds Time
period 1935 - 2006 Average annual returns for 10
years
Best return 16 Worst return 1 Gap between
bestand worst returns 15