Wall Street History

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Wall Street History

04/02/2004

Rates of Return

The new 2004 Ibbotson Associates Yearbook is out and since I
paid good money for it, and since all financial planners and
brokers use it (at least their marketing departments do I know
from experience), it’s time to throw out the historical facts.

Compound Annual Rates of Return by Decade

30s 40s 50s 60s 70s 80s 90s 00s

Large Cap Stocks..-0.1 .9.2 19.4 7.8 5.9 17.5..18.2..-5.3
Small Cap Stocks...1.4 20.7 16.9..15.5..11.5 15.8..15.1..13.3
Long-Term Govt. ..4.9 .3.2 -0.1 .1.4 5.5...12.6 8.8...10.8
Inter.-Term Govt. ..4.6 .1.8 .1.3 ..3.5...7.0 11.9 7.2 8.8
Treasury Bills .0.6 .0.4 .1.9 ..3.9...6.3 .8.9 .4.9 3.1
Inflation .-2.0 5.4 ..2.2 .2.5 7.4 5.1 .2.9 2.3

Notes:

00s 2000-2003
Large Cap – S&P 500
Small Cap – 5th capitalization quintile of stocks on NYSE, 1926-
81, various Dimensional Fund Advisors indices since 1982.
Long-term govt. – 20-year Treasury
Inter.-term govt. – 5-year Treasury
Treasury bill – 30 days
Inflation – CPI

1926-2003 Average Annual Return (geometric mean)

Large Cap Stocks 10.4
Small Cap Stocks 12.7
Long-Term Govt. 5.4
Inter.-Term Govt. 5.4 (yes, same)
U.S. Treasury Bills..3.7
Inflation. ..3.0

And just for the heck of it, I thought I’d take a look at how the
S&P 500 has performed in the summer months during an
election year; another attempt to beat the punch.

.June July August

2000 .+2.5 -1.6 ..+6.2
1996 .+0.4 -4.5 ..+2.1
1992 .-1.5 .+4.0 .-2.0
1988 +4.6 .-0.4 ..-3.3
1984 +2.2 .-1.4 +11.3
1980 +3.0 .+6.8 +1.3
1976 +4.3 .-0.7 .+0.1
1972 -2.1 ..+0.4 +3.9
1968 +1.1 .-1.7 .+1.6
1964 +1.8 .+2.0 -1.2
1960 +2.1 .-2.3 .+3.2

Source: Ibbotson Associates Inc., 2004 Yearbook

Wall Street History will return April 9.

Brian Trumbore

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