A YEAR TO FORGET – This Thursday (10/09/08) marks the 1-year anniversary of the S&P 500’s all-time closing high of 1565. The low close for the index over the past year took place on 10/03/08 (last Friday) when the S&P 500 dropped to 1099, off 29.8% from its peak. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).
FROM TOP TO BOTTOM – In the 9 bear markets for the S&P 500 since 1957 (not counting the current downturn which is the 10th bear market since 1957), the average decline from the stock index’s peak close to its bear market low close was 31.5%. The average length of time from the stock index’s peak close to its bear market low close has been 12.3 months (source: BTN Research).
BAD MONTH – The S&P 500 lost 8.9% (total return) in September 2008, its worst monthly performance since the stock index fell 10.9% in September 2002. The 2000-02 bear market lasted 30 ? months and suffered through a 49% drop but the bear market ended nine days after the September 2002 double-digit loss (source: BTN Research).
OCTOBER HISTORY – Since 1990, October has been the best performing month for the S&P 500, up 2.2% (total return) on average. Six of the last 7 Octobers have been up (source: BTN Research).
A LONG BULL MARKET – The best performing bull market for the S&P 500 in the previous 75 years lasted 9 years. From a low on 10/11/90 to a high on 3/24/00, the S&P 500 gained 417% (source: BTN Research).
BEARISH BONDS – As nervous investors sold stocks and bought bonds last month, the yield on the 10-year Treasury note fell to 3.41% on 9/15/08 (i.e., price up, yield down), a yield drop of 0.61% since the beginning of the year. As the bond market came to grips with the immense size of the bailout measures proposed by the US government in the last month (e.g., $200 billion for Fannie and Freddie, $85 billion for AIG, $700 billion for the purchase of bad mortgages from banks), concerns about the nation’s rising debt level (i.e., requiring an increased supply of Treasury notes) have pushed prices down and yields up to 3.83% as of 9/30/08 (source: BTN Research).
RTC HISTORY – The eventual cost to taxpayers of the Resolution Trust Corporation (aka RTC, which ran from 1989-95) was $120-140 billion, more than 70% less than the original $500 billion cost estimate. The RTC was created to sell real estate assets from failed savings and loans (source: NY Times, Denver Post).
DUBIOUS RECORD – The government will release its budget deficit results from September this upcoming week, bringing a close to fiscal year 2008. It is anticipated that the final deficit number for the year will reflect a $389 billion deficit, the second largest annual total ever, trailing only the country’s $413 billion deficit from fiscal year 2004. Merrill Lynch economists are projecting a $900 billion deficit for fiscal year 2009 and an $825 billion deficit for fiscal year 2010. Fiscal year 2009 began last Wednesday (source: Financial Times).
TWO GENERATIONS – 51% of Americans ages 44 to 62 believe the retirement lifestyle enjoyed by their parents’ generation will be better than the one that they will experience (source: USA Today, Charles Schwab)
NO RETIREMENT AT 65 – 33% of American men ages 65 to 69 are currently employed for pay and 72% of this working group (i.e., 72% of the 33% or 24% of all men between these ages) are employed on a full-time basis (source: PlanSponsor.com, Congressional Research Service). This information is educational in nature and is being provided with the understanding that it is not intended to be interpreted as specific legal or tax advice. Individuals are encouraged to consult with a professional in regards to legal, tax, and/or investment issues.