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The stock market boom of the late 1990s had a large impact on the US economy. The annual growth rate of GDP would have been around 2.8% instead of the reported 4.5% without the stock market boom. The boom added approximately $2.5 trillion per year to household wealth, fueling more consumption and investment. This additional growth accounts for the unusually strong economic expansion during that period. The economy may have avoided recession in 2001-2002 without the boom and subsequent market correction.
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Casefair28
The stock market boom of the late 1990s had a large impact on the US economy. Estimates show that without the boom, economic growth would not have looked unusually high and the unemployment rate would have been higher around 5.5% rather than 4%. The boom added approximately $2.5 trillion annually to the economy through increased wealth, consumption, and investment, accounting for over 1.5% of annual GDP growth.
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This document outlines 10 key principles for improving the odds of investment success:
1) Embrace market pricing and the information incorporated into prices.
2) Don't try to outguess the market through stock picking or market timing as most funds do not outperform their benchmarks.
3) Resist chasing past performance as it does not predict future returns.
4) Let markets work for you through long-term investing as this has rewarded investors over time.
Stock Market And The Economy
The document discusses the stock market boom of the late 1990s and its impact on the US economy. It finds that the stock market boom between 1995 and 2000 added significantly to economic growth during that period, with estimates that GDP growth was 1.5% higher each year due to the wealth effects of rising stock prices. However, it also led to issues like a lower personal saving rate, a higher trade deficit, and made the economy more vulnerable when the bubble burst in 2001-2002. The document concludes that without the stock boom, the 1990s expansion would not have looked as strong and the 2001 recession may not have occurred.
Pursuing a Better Investment Experience
The document provides information about pursuing a better investment experience by discussing various fees associated with mutual fund investments and noting that mutual funds are not guaranteed and past performance is not indicative of future returns. It emphasizes embracing market pricing, avoiding attempts to outguess the market through stock picking or market timing, and resisting chasing past performance. The document advocates letting markets work for the investor through long-term, globally diversified investments.
Pursuing_a_Better_Investment_Experience_Slides
This document provides guidance on pursuing a better investment experience. It recommends embracing market pricing, not trying to outguess the market, resisting chasing past performance, letting markets work for you long-term, considering drivers of returns like company size and profitability, practicing smart diversification globally, avoiding market timing, managing emotions, focusing on long-term advice over entertainment, and controlling what you can like having a tailored plan.
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- Market volatility has increased at the start of 2016 due to worries over slowing Chinese growth, geopolitical tensions, and falling oil prices. While much bad news is priced in, the author prefers a cautious positioning.
- Fears from 2015, such as concerns about China's economy, geopolitics, and low oil prices, are again impacting markets. However, divergence in central bank policies and improved conditions in developed market labor markets and peripheral European economies create a different environment than last year.
- Due to limited growth and profit prospects alongside not yet extremely cautious sentiment, the author advocates a modest risk stance for asset allocation.
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Casefair28
The stock market boom of the late 1990s had a large impact on the US economy. Estimates show that without the boom, economic growth would not have looked unusually high and the unemployment rate would have been higher around 5.5% rather than 4%. The boom added approximately $2.5 trillion annually to the economy through increased wealth, consumption, and investment, accounting for over 1.5% of annual GDP growth.
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This document outlines 10 key principles for improving the odds of investment success:
1) Embrace market pricing and the information incorporated into prices.
2) Don't try to outguess the market through stock picking or market timing as most funds do not outperform their benchmarks.
3) Resist chasing past performance as it does not predict future returns.
4) Let markets work for you through long-term investing as this has rewarded investors over time.
Stock Market And The Economy
The document discusses the stock market boom of the late 1990s and its impact on the US economy. It finds that the stock market boom between 1995 and 2000 added significantly to economic growth during that period, with estimates that GDP growth was 1.5% higher each year due to the wealth effects of rising stock prices. However, it also led to issues like a lower personal saving rate, a higher trade deficit, and made the economy more vulnerable when the bubble burst in 2001-2002. The document concludes that without the stock boom, the 1990s expansion would not have looked as strong and the 2001 recession may not have occurred.
Pursuing a Better Investment Experience
The document provides information about pursuing a better investment experience by discussing various fees associated with mutual fund investments and noting that mutual funds are not guaranteed and past performance is not indicative of future returns. It emphasizes embracing market pricing, avoiding attempts to outguess the market through stock picking or market timing, and resisting chasing past performance. The document advocates letting markets work for the investor through long-term, globally diversified investments.
Pursuing_a_Better_Investment_Experience_Slides
This document provides guidance on pursuing a better investment experience. It recommends embracing market pricing, not trying to outguess the market, resisting chasing past performance, letting markets work for you long-term, considering drivers of returns like company size and profitability, practicing smart diversification globally, avoiding market timing, managing emotions, focusing on long-term advice over entertainment, and controlling what you can like having a tailored plan.
[EN] Column / MA Fears and fragility / Januari 2016
- Market volatility has increased at the start of 2016 due to worries over slowing Chinese growth, geopolitical tensions, and falling oil prices. While much bad news is priced in, the author prefers a cautious positioning.
- Fears from 2015, such as concerns about China's economy, geopolitics, and low oil prices, are again impacting markets. However, divergence in central bank policies and improved conditions in developed market labor markets and peripheral European economies create a different environment than last year.
- Due to limited growth and profit prospects alongside not yet extremely cautious sentiment, the author advocates a modest risk stance for asset allocation.
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The document provides disclosures and sources for several exhibits. Exhibit 1 discloses trading data sources for world equity trading volumes. Exhibit 2 describes the mutual fund sample and methodology used to determine "winner" funds that outperformed benchmarks. Exhibit 3 explains how the analysis was conducted to determine the percentage of top-ranked funds that maintained their ranking in subsequent years. The source for Exhibits 2 and 3 is also provided.
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1. The document discusses inflation and its impact on purchasing power over time. Even at 2% inflation per year, the purchasing power of £1000 is reduced to £600 after 25 years.
2. It provides information on the Consumer Price Index (CPI) and Retail Price Index (RPI), noting key differences in their calculation and which is considered more relevant.
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1. The document discusses inflation and its impact on purchasing power over time. Even at 2% inflation per year, the purchasing power of £1000 is reduced to £600 after 25 years.
2. It provides information on the Consumer Price Index (CPI) and Retail Price Index (RPI), noting key differences in their calculation and which is considered more relevant.
3. Examples are given of items that have been added to or removed from the CPI basket in recent years as it is annually reviewed and updated to reflect consumer spending habits.
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The document provides an overview of recent economic developments and investment sentiment from various regions. It notes that while the US and China continue to debate currency policies, a G20 meeting did not provide clarity on the issue. Germany is outperforming other European countries as indicators show growth, while problems are mounting in Ireland. In the US, government programs spent only half their funds and losses are expected to be small, while housing markets are stabilizing. China is investing in Europe and emerging markets are growing quickly, raising interest rates to cool their economies. The author's investment sentiment remains neutral but slightly positive.
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1) Inflation occurs when prices rise overall in an economy. It can be caused by demand-pull factors like too much spending chasing too few goods, or cost-push factors like rising wages.
2) There are different rates of inflation including low inflation under 10%, galloping inflation in the double or triple digits, and hyperinflation over a million percent. High and unpredictable inflation distorts economies.
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2) It finds that market timing strategies based on P/E ratios and dividend yields alone do not reliably outperform buy-and-hold, as these valuations measures combine both sentiment and fundamental value, which are difficult to disentangle.
3) A sentiment index may have some advantage over valuation ratios as a market timing tool, but the document concludes that successfully timing the market requires insights into future sentiment and value that are not fully captured by widely available indicators.
2009 Market Outlook
The document summarizes the outlook for markets in 2009. It believes the recession will persist through 2009 with a weak recovery. Government stimulus plans aim to boost spending but the effects may be delayed. The Federal Reserve has increased money supply but must remove excess cash to avoid inflation. Consumers are saving more due to debt and falling asset values, which may slow growth but support bond prices. Global trade and capital flows are also slowing. The outlook calls for a challenging year with opportunities in quality companies and bonds offering higher yields. Flexibility will be needed to respond to changing opportunities and risks.
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FINANCIAL ANALYSISHow Fast Should Your CompanyGrowb
FINANCIAL ANALYSIS
How Fast Should Your Company
Grow?
by William E. Fruhan, Jr.
FROM THE JANUARY 1984 ISSUE
The phrase “fast growth” conjures up a picture of a high-technology company servingmarkets that have seemingly inexhaustible appetites for its products. Panting investors andrising stock prices are generally part of the image. A typical example of such a high-growth
company is Tandy Corporation, owner of the Radio Shack chain and manufacturer of the TRS-80
microcomputer. At the other end of the growth spectrum are companies whose markets shrink due
to declining demand and/or foreign competition and whose stock prices fall. These companies are
typified by National Steel Corporation. (National Steel recently formed a holding company and
adopted a new corporate name, National Intergroup, Inc.) Exhibit I shows the performances of
Tandy and National Steel.
Exhibit I Relative price performance of Tandy Corporation and National Steel Corporation common
stocks and the Dow Jones industrial average
Obviously, some companies lack the financial resources to fully exploit available product-market
growth opportunities. Others don’t have opportunities adequate to match their financial capacity.
Financial resources and product-market opportunity help determine how fast a company can grow,
but given those two ingredients, how fast should a company grow? Is growth always so important?
Shareholders think growth desirable if it adds to the value of their common stock. Economists
believe that addition of value to corporate common stock indicates the most efficient allocation of
resources. Producers and consumers benefit under the direction of Adam Smith’s invisible hand.
But the cases of Tandy and National Steel raise interesting questions: Under what circumstances
does growth add value for a company’s shareholders? To answer, you first must examine the
interaction among inflation, capital costs, profitability, growth, and the market value of a company’s
common stock.
(National Steel has proven well aware of the implications of its situation. In the 1981 annual report
to stockholders, the company announced that its “existing lines of business will be managed to
provide a competitive return on their invested capital. Those businesses will be expanded that have
good prospects for contributing to National’s financial mission. Conversely, those businesses that
cannot demonstrate either cash-generating capabilities or solid growth prospects will be reduced or
divested.” The implementation of this strategy as reflected in the imaginative form of the divestiture
of the Weirton Division, a facility that accounted for one-third of steel production in 1981 and 1982,
should be a major assist to National’s efforts to return the company to adequate levels of
profitability.)
The illustration of interrelationships in Exhibit II helps explain the peculiar behavior of stock market
prices over the past two decades. The road map can guide ...
Common stock basics
1. Common stock represents ownership in a corporation and a claim on its assets and earnings. There are different types including common, preferred, and classes A and B.
2. Owners of common stock are also known as shareholders or equity owners. They may receive dividends as determined by the board of directors and can benefit from capital gains.
3. Fundamental analysis and technical analysis are two main approaches used to evaluate common stocks and make investment decisions.
Common stock basics
Common stock represents partial ownership in a corporation. There are two main types: common stock which usually entitles the owner to vote, and preferred stock which generally does not have voting rights but has a higher claim on assets and earnings. Common stock owners are also known as shareholders or equity owners. A board of directors is elected to establish policies and make decisions on major company issues. Companies may pay dividends to shareholders from a portion of earnings.
Dr. Αvi Sharon, ocin22
This document discusses retirement planning and decumulation strategies. It provides historical context on retirement in Greek culture and the transition to individual saving. It also discusses the challenges facing retirees in the US, including managing withdrawals, market risks, and longevity risks. The document advocates for combining safety and growth in retirement portfolios, and outlines strategies like target date funds, income replacement, and combining various account types to help solve decumulation challenges.
CFA InstituteThe Equity Premium Stock and Bond Returns si.docx
CFA Institute
The Equity Premium: Stock and Bond Returns since 1802
Author(s): Jeremy J. Siegel
Source: Financial Analysts Journal, Vol. 48, No. 1 (Jan. - Feb., 1992), pp. 28-38+46
Published by: CFA Institute
Stable URL: http://www.jstor.org/stable/4479502
Accessed: 30/03/2010 21:52
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28
Jeremy J. Siegel
Over the period from 1802
through 1990, equity has
provided returns superior
to those on fixed income
investments, gold or com-
modities. Most strikingly,
the real rate of return on
equity held remarkably
constant over this period,
while the real return on
fixed income assets de-
clined dramatically. Over
the subperiods 1802-70,
1871-1925 and 1926-90,
the real compound annual
returns on equity were 5. 7,
6.6 and 6.4 per cent, but
the real returns on short-
term government bonds
dropped from 5.1 to 3.1
and, finally, 0.5 per cent.
The magnitude of the ex-
cess return on equity, espe-
cially during this century,
appears excessive relative to
the behavior of other mac-
roeconomic variables. In
the future, the real return
on fixed income assets may
be closer to the historical
norm of 3 to 4 per cent.
While stock returns will
probably continue to domi-
nate bond returns, they will
not do so by nearly as wide
a margin as they have over
the past 65 years.
Since 1926, the compound real
value-weighted return on all
stocks listed on the New York
The Equity Premium: Stock and Bond Returns Since
1802
Stock Exchange has averaged 6.4
per cent ...
Strictly Financials 2014: Decoding Financial Statements by Gary Trennepohl
Strictly Financials 2014: Decoding Financial Statements by Gary TrennepohlReynolds Center for Business Journalism
Garry Trennepohl presents "Decoding Financial Statements" during the Reynolds Center for Business Journalism's annual Business Journalism Week, Jan. 4, 2014. Trennepohl is the ONEOK Chair of Finance at Oklahoma State University.
The annual event features two concurrent seminars, Business Journalism Professors and Strictly Financials for journalists.
For more information about business journalism training, please visit http://businessjournalism.org.Can Small Cap Stocks Weather the Storm?
This document summarizes research analyzing whether small cap stocks are well positioned to weather an economic downturn caused by the COVID-19 pandemic.
The research finds that small cap companies' financial characteristics, such as leverage, leading into the crisis were consistent with long-term trends. Historical data also shows no relationship between the rate of small cap company delistings and relative small cap stock performance. While small caps may be more vulnerable operationally, market prices already reflect expectations about future cash flows, including recession impacts. Overall, the research finds that small cap stocks can still deliver higher expected returns even during an economic downturn. Investors are thus advised to maintain a diversified portfolio including small cap stocks.
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FINANCIAL ANALYSISHow Fast Should Your CompanyGrowb
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CFA InstituteThe Equity Premium Stock and Bond Returns si.docx
CFA InstituteThe Equity Premium Stock and Bond Returns si.docx
Strictly Financials 2014: Decoding Financial Statements by Gary Trennepohl
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Casefair28
- 1. The Stock Market and the Economy
- 8. Bonds of 41 15-yr. Bond Face Value: $10,000 Coupon rate: 10% Yearly payment of $1,000 Bank Account requires only: $5,000 with interest rate of 20% To obtain same yearly payment of $1,000
- 22. The S&P 500 Stock Price Index, 1948 I – 2002 III of 41
- 25. Growth Rate of S&P 500 Earnings, 1948 I – 2002 III of 41
- 26. Ratio of Profits to GDP, 1948 I – 2002 III of 41