25 Years To Bounce Back? Try 4 1/2 - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group

25 Years To Bounce Back? Try 4 1/2 “An investor who invested a lump sum in the average stock at the market’s 1929 high would have been back to a break-even by late 1936 – less than four and a half years after the mid-1932 market low.” -Mark Hulbert, New York Times 04/26/09 www.skloff.com

25 Years To Bounce Back? Try 4 1/2 Three Key Factors Have Obscured The Facts: 1. Deflation 2. Dividends 3. Dow Jones Industrial Average vs. Overall Stock Market www.skloff.com

25 Years To Bounce Back? Try 4 1/2 1. Deflation Dow Closed at 381.17 on 09/03/29 Down Returned to its Old High on 11/23/54 This Excludes Effects of Inflation and Deflation The Great Depression Was a Deflationary Period The Consumer Price Index in Late 1936 was 18% Lower than in the Fall of 1929 Not Adjusting for Deflation Exaggerates the Decline www.skloff.com

25 Years To Bounce Back? Try 4 1/2 2. Dividends Dividends Have Always Played an Important Role On the 07/08/32 Dow Low of 41.22 the Overall Stock Market Dividend Yields was Close to 14% Ignoring Dividends, Especially During High Yield Periods, Exaggerates Losses www.skloff.com

25 Years To Bounce Back? Try 4 1/2 3. Dow Jones Industrial Average vs. Overall Stock Market The Dow Jones Represents Only 30 Stocks The Dow Jones Often Misrepresents the Overall Market Perfect Example: International Business Machines (IBM) IBM’s stock was Top Performer During 1940’s IBM was Removed from Down Jones 1939-1979 Dow Jones Would Have been 100% Higher in 1979 www.skloff.com

25 Years To Bounce Back? Try 4 1/2 The Overall Stock Market Returned to its Pre-1932 Low in Just 4 Years and 5 Months According to Ibbotson Associates, a Division of Morningstar www.skloff.com

25 Years To Bounce Back? Try 4 1/2 - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group

by Aaron Skloff, AIF, CFA, MBA on Apr 27, 2009

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25 Years To Bounce Back? Try 4 1/2 - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group — Presentation Transcript