I thought we’d take a break for a while from the historical essays
and look at some numbers, especially since I just shelled out big
bucks for the 2003 Ibbotson Associates Yearbook, from which all
of the following is culled.
For the period 1926-2002, Annual Total Returns
[Geometric mean]
Large Company Stocks (S&P 500)…10.2%
Small Company Stocks………….….12.1%
Long-Term Corporate Bonds..……….5.9%
Long-Term Government Bonds..…….5.5%
Intermediate-Term Govt. Bonds……..5.4%
U.S. Treasury Bills……………………3.8%
Inflation………………………………3.1%
Notes:
Small Co. stocks have been measured using various indices over
the years, including most recently the Dimensional Fund
Advisors Micro Cap Fund.
Long-Term Corporates: measured by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index.
Long-Term Governments: a one-bond portfolio consisting of the
20-year Treasury.
Intermediate-Term Governments: a one-bond portfolio consisting
of the 5-year Treasury.
U.S. Treasury Bills: a one-bill portfolio of 30 days.
Inflation is measured by the Consumer Price Index.
—
Compound Annual Rates of Return by Decade
…………….60s….70s…..80s….90s….00s…93-02
Large Caps….7.8….5.9….17.5….18.2….-14.6…..9.3*
Small Caps…15.5…11.5…15.8…15.1…..0.9….11.6
Inter. Govts…3.5….7.0…11.9….7.2….11.0…..7.3
T-Bills………3.9….6.3…..8.9….4.9…..3.8……4.4
Inflation……..2.5….7.4…..5.1….2.9….2.4……2.5
*Returns on the S&P 500 for the period 1993-2002
1993…10.0
1994….1.3
1995…37.4
1996…23.1
1997…33.4
1998…28.6
1999…21.0
2000…-9.1
2001..-11.9
2002..-22.1
Tidbits
–The last time the CPI was over 3.4% for a single year was 1990. [1987-1990…4.4%-6.1% each year.]
–Ah, the importance of dividends in the old days, like 1975-85, when dividends on the S&P 500 contributed 4.3%-5.7%, annually, of the total return on the index.
More next week, including some figures on Growth vs. Value.
Brian Trumbore
