Downturns and recoveries
Download
1 / 10

Downturns and Recoveries - PowerPoint PPT Presentation


  • 98 Views
  • Uploaded on

Downturns and Recoveries.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Downturns and Recoveries' - shelley


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Downturns and recoveries

Downturns and Recoveries

Securities offered through Lincoln Financial Advisors Corp., a broker/dealer,1300 S. Clinton Street, Fort Wayne, IN 46802-3506, Phone 800-454-6265.Insurance offered through Lincoln affiliates and other fine companies.Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.

CRN200510-1003362


Stock market contractions and expansions
Stock market contractions and expansions

1972–2004

$100

Contraction

Expansion

Stocks

$10

$1

$0

Cumulative return

354.8

400%

281.5

200%

85.9

86.5

71.2

62.6

54.7

0%

-42.6

-14.1

-16.9

-29.5

-14.7

-15.4

-44.7

-100%

2004

1972

1976

1980

1984

1988

1996

2000

1992


Market downturns and recoveries
Market downturns and recoveries

1926–2004

Downturn

Recovery

34 months

6 months

7 months

5 months

6 months

8 months

19 months

21 months

14 months

20 months

3 months

5 months

2 months

25 months

-83.4%

-21.8%

-10.2%

-15.0%

-22.3%

-15.6%

-29.3%

-42.6%

-14.1%

-16.9%

-29.5%

-14.7%

-15.4%

-44.7%

151 months

35 months

5 months

7 months

10 months

6 months

9 months

21 months

5 months

3 months

18 months

4 months

3 months

Sept 1929 – June 1932

July 1932 – Jan 1945

June 1946 – Nov 1946

Dec 1946 – Oct 1949

Aug 1956 – Feb 1957

March 1957 – July 1957

Aug 1957 – Dec 1957

Jan 1958 – July 1958

Jan 1962 – June 1962

July 1962 – April 1963

Feb 1966 – Sept 1966

Oct 1966 – March 1967

July 1970 – March 1971

Dec 1968 – June 1970

Jan 1973 – Sept 1974

Oct 1974 – June 1976

Jan 1977 – Feb 1978

March 1978 – July 1978

Dec 1980 – July 1982

Aug 1982 – Oct 1982

Sept 1987 – Nov 1987

Dec 1987 – May 1989

June 1990 – Oct 1990

Nov 1990 – Feb 1991

July 1998 – Aug 1998

Sept 1998 – Nov 1998

Sept 2000 – Sept 2002


Periods of consecutive negative stock returns
Periods of consecutive negative stock returns

1926–2004

60%

54%

37%

40%

29%

20%

20%

Return

0%

-0.4%

-8%

-8%

-9%

-10%

-12%

-12%

-15%

-20%

-22%

-25%

-26%

-40%

-43%

-60%

2000

2001

2002

2003

1929

1930

1931

1932

1933

1939

1940

1941

1942

1973

1974

1975

Average stock market return is 10.4%.


Stock performance during recessions
Stock performance during recessions

1945–2004

2001

$1,000

Shaded regions denote economic recessions

1990

$100

1982

1980

1974

1970

1960

$10

1958

1954

1949

$1

$.10

1945

1955

1965

1975

1985

1995

2004

Hypothetical value of $1 invested at year-end 1945. Assumes reinvestment of income and no transaction costs or taxes.


Stock performance after recessions
Stock performance after recessions

1945–2004

80%

74.0%

Small company stocks

70%

Large company stocks

60%

47.7%

50%

40%

33.7%

30%

20.1%

19.1%

20%

11.4%

10%

3.8%

2.2%

0%

After 1 month

After 6 months

After 1 year

After 3 years

Cumulative returns of large and small stocks after recessions 1945–2004


History of interest rates

Average

Current

6.85%

6.43%

5.86%

5.78%

History of interest rates

July 1954–December 2004

20%

15%

10%

5%

0%

1 yr yld

IT gvt yld

LT gvt yld

Fed funds

Each bar shows the range of yield for each bond over the time period July 1954 to December 2004.


Bond yields during recessions 1946 2004
Bond yields during recessions 1946–2004

January 1946 through December 2004

18%

16%

Shaded regions denote economic recessions

U.S. long-term gov’t bonds

14%

U.S. short-term gov’t bonds (4/53–12/04)

12%

10%

8%

6%

4.8%

4%

2.8%

2%

0%

1946

1956

1966

1976

1986

1996

2004


Stock returns and monetary policy

^

12.0%

Stock returns and monetary policy

Annualized monthly returns, July 1971–December 2004

^

Entire period average = 12.0%

Monetary period

Period length*

Restrictive

Expansive

Jul 71–Oct 71

-1.9%

3 months

Nov 71–Dec 72

24.4%

13 months

Jan 73–Nov 74

-21.4%

22 months

Dec 74–Jul 77

31 months

19.4%

Aug 77–Apr 80

9.9%

32 months

May 80–Aug 80

44.1%

3 months

Sep 80–Oct 81

3.4%

13 months

Nov 81–Mar 84

28 months

15.9%

Apr 84–Oct 84

13.9%

6 months

33 months

Nov 84–Aug 87

30.6%

Sep 87–Nov 90

5.6%

38 months

Dec 90–Apr 94

40 months

12.9%

May 94–Dec 95

22.1%

19 months

Jan 96–Jul 99

24.3%

42 months

Aug 99–Dec 00

2.5%

16 months

41 months

Jan 01–Jun 04

-2.2%

Jul 04–Dec 04

25.1%

5 months

-40%

-30%

-20%

-10%

0%

Average Return

20%

30%

40%

50%

*Period length and calculation exclude the month of initial change in policy to measure “pure” monetary policy environment.


U s market recovery after tragedy
U.S. market recovery after tragedy

Cumulative return of the S&P 500 after tragic events

90%

81.4

After 1 month

After 6 months

70%

After 1 year

57.7

56.6

After 3 years

50%

26.9

30%

20.3

15.9

12.6

11.0

8.3

6.1

10%

2.2

1.9

1.6

-1.0

-4.9

-10%

-20.5

-30%

Dec 7, 1941

Pearl Harbor

Aug 2, 1990

Iraq invades Kuwait

Feb 26, 1993

World Trade Center

bombed

Sept 11, 2001

Terrorist attack

Monthly data is assumed. Returns reflect the percentage change in the index level from the end of the month that the event

occurred to 1 month, 6 months, 1 year, and 3 years after.