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04/25/2003

Just the Facts, Part II

This week we’ll examine the numbers for investing in Growth
vs. Value stocks, as well as some facts about investing in the
international markets. All figures are gleaned from the 2003
Ibbotson Associates Yearbook. Ibbotson, in conjunction with the
Center for Research in Security Prices at the University of
Chicago, has developed its own method for determining asset
class returns, with the numbers going back to 1968.

For the period 12/67-12/02, all value stocks (small, mid, and
large) have far outpaced growth stocks, 12.5% on an annualized
basis to 9.0%. Meaning that $1 grew to $61.26 for a value
investment over the same period, versus just $20.32 for growth,
not the latter is anything to sneeze at.

For the period 1993-2002:

All Growth +8.0%
All Value ..+12.0%

Small Cap Growth .-2.8%
Small Cap Value ..+12.3%

And I thought we’d take a look at the period 1992-2002, which
encompasses 3 years of slow growth following a recession, a 5-
year period of more robust growth, and then the 3-year ‘bursting
of the bubble’ era that also included another recession.

Annual % Returns / Large Cap Growth vs. Large Cap Value

LCG .LCV

1992 .+4 .+16
1993 .+3 .+24
1994 .+1 ..+1

1995 +41 +52
1996 +25 +23
1997 +36 +50
1998 +81 +22
1999 +27 +31

2000 -22 .-15
2001 -20 .-10
2002 -21 .-21

Global Market Capitalization / Developed Economies, 12/02

United States 52%
Japan 11%
Other Pacific ..4%
United Kingdom 9%
Other Europe 21%
Canada .3%

Source: Morgan Stanley Capital International Blue Book

For the period 1970-2002:

Europe 10.7% annualized return
United States ..10.8%

International stocks significantly underperformed during the
period 1995-97, due to poor returns from Asia, but European
stocks matched up fairly well against the U.S.

..SP 500 .Int’l Europe

1995 .37.4.....11.6.....22.1
1996 .23.1......6.4 ..21.6
1997 .33.4......2.1 ..24.2

Since ’97, returns have been more similar, especially 2000-2002,
with every broad-based region down from 8 to 26%, annually.

Seasonality

And for those operating under the old saw, buy in November and
sell in May, looking at the S&P 500 index:

May has been negative 4 of the last 5 years
June negative 2 of 5.
July negative 5 of 5.
August negative 3 of 5.
September negative 4 of 5.

But October is positive 4 of the last 5 years.

*Wall Street History will return May 9.

Brian Trumbore









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-04/25/2003-      
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Wall Street History

04/25/2003

Just the Facts, Part II

This week we’ll examine the numbers for investing in Growth
vs. Value stocks, as well as some facts about investing in the
international markets. All figures are gleaned from the 2003
Ibbotson Associates Yearbook. Ibbotson, in conjunction with the
Center for Research in Security Prices at the University of
Chicago, has developed its own method for determining asset
class returns, with the numbers going back to 1968.

For the period 12/67-12/02, all value stocks (small, mid, and
large) have far outpaced growth stocks, 12.5% on an annualized
basis to 9.0%. Meaning that $1 grew to $61.26 for a value
investment over the same period, versus just $20.32 for growth,
not the latter is anything to sneeze at.

For the period 1993-2002:

All Growth +8.0%
All Value ..+12.0%

Small Cap Growth .-2.8%
Small Cap Value ..+12.3%

And I thought we’d take a look at the period 1992-2002, which
encompasses 3 years of slow growth following a recession, a 5-
year period of more robust growth, and then the 3-year ‘bursting
of the bubble’ era that also included another recession.

Annual % Returns / Large Cap Growth vs. Large Cap Value

LCG .LCV

1992 .+4 .+16
1993 .+3 .+24
1994 .+1 ..+1

1995 +41 +52
1996 +25 +23
1997 +36 +50
1998 +81 +22
1999 +27 +31

2000 -22 .-15
2001 -20 .-10
2002 -21 .-21

Global Market Capitalization / Developed Economies, 12/02

United States 52%
Japan 11%
Other Pacific ..4%
United Kingdom 9%
Other Europe 21%
Canada .3%

Source: Morgan Stanley Capital International Blue Book

For the period 1970-2002:

Europe 10.7% annualized return
United States ..10.8%

International stocks significantly underperformed during the
period 1995-97, due to poor returns from Asia, but European
stocks matched up fairly well against the U.S.

..SP 500 .Int’l Europe

1995 .37.4.....11.6.....22.1
1996 .23.1......6.4 ..21.6
1997 .33.4......2.1 ..24.2

Since ’97, returns have been more similar, especially 2000-2002,
with every broad-based region down from 8 to 26%, annually.

Seasonality

And for those operating under the old saw, buy in November and
sell in May, looking at the S&P 500 index:

May has been negative 4 of the last 5 years
June negative 2 of 5.
July negative 5 of 5.
August negative 3 of 5.
September negative 4 of 5.

But October is positive 4 of the last 5 years.

*Wall Street History will return May 9.

Brian Trumbore