By the Numbers

Stock Market History – The S&P 500 stock index was up 15.8% in 2006, more than 5% better than the 10.6% average annual return achieved over the last 50 years. Over the last half century, the S&P 500 has produced a positive return in 38 years (76% of the time) and been down the other 12 years (24% of the time). All numbers are total return performance results.

Top of the Mountain – Both mid-cap stocks (as measured by the S&P 400 Midcap index) and small-caps (as measured by the Russell 2000) reached all-time highs in 2006. Mid-caps were up 10.3% for the year after peaking in December. Small-caps were up 18.4% in 2006 after hitting its apex at the end of December, the last of 33 new all-time highs the index achieved last year. Both results are total return figures.

Last Year – The 15.8% total return of the S&P 500 for 2006 is 1.23% compounded per month. The large-cap index was up 11 of 12 months last year, matching a performance last accomplished in 1995. The index was up 141 out of 251 trading days in 2006 or 56% of the time.

1,000% Gain – Over the last 251 months (20 years, 11 months) through the end of December 2006, the S&P 500 is up 1,000% (total return), or an annualized 12.1% per year. That period covers 5,276 trading days with 2,826 days being up (54% of the time) and 2,450 days were down or 46% of the time.

Best & Worst Months – In the last 10 years, the best performance of the S&P 500 over 12 consecutive months was the period from August ‘96 to July ‘97 when the index was up 52% (total return). The worst 12-month stretch started October 2000 and ended September ’01 and produced a 27% total return loss.

Small Versus Large – The small-cap Russell 2000 was up 18.4% (total return) in 2006, beating the large-cap S&P 500 by 2.6%. Over the last 10 years, the Russell 2000 has beaten the large-cap S&P 500 by 1.0% compounded per year.

Value Versus Growth – The Russell 1000 stock index (largest 1,000 US stocks) represents 92% of the domestic stock capitalization, more than the 75% represented by the S&P 500. The Russell 1000 was up 15.5% (total return) in 2006, 0.3% less than the 15.8% turned in by the S&P 500. The “value” component of the Russell 1000 was up 22.3% versus the 9.1% produced by the “growth” component of the index.

NASDAQ Performance – The NASDAQ was up 9.5% in 2006 (not counting the impact of dividends). If you missed the four best days of the NASDAQ in 2006, your return falls to a 0.9% loss for the year. If you avoided the four worst days of the NASDAQ in 2006, your return jumped to 19.8%.

Stock Evaluation – The P/E ratio of the S&P 500 at the end of 2006 was 18.1, down from an 18.7 P/E ratio a year earlier. The index’s long-term 70-year historical average P/E ratio is 15.7.

Big Years, Bad Years – In the last 50 years, the S&P 500 has produced a total return greater than 23% in 13 different years. The number of years that the stock index has resulted in a negative performance during a calendar year is 12.

Foreign Stocks – The international stock index EAFE was up approximately 26.5% in 2006, more than 10% better than the S&P 500 last year. Over the last 10 years, the EAFE index has trailed the S&P 500 by 0.7% per year (8.4% versus 7.7% per year). All numbers are total return performance results.

Yield Moves Upward – The yield on the 10-year Treasury note finished 2006 at 4.71%, the highest year-end yield on the 10-year note since its 5.02% yield from the end of 2001.

Currency Movement – The Euro ended 2006 at $1.32, up 12% versus the dollar during the calendar year. Over the previous four years, the Euro had gained 31% ($0.9 to $1.18) versus the dollar.

Retirement Savings in 2007 – The maximum elective employee deferral into an employer-sponsored 401(k) plan in 2007 is $15,500. That amount does not include the $5,000 in “catch-up” deferrals that an individual age 50 or greater can contribute.

DB & DC Limits – Defined benefit (DB) pension plans can be funded to produce annual retirement income of $180,000 beginning in 2007. Twenty years ago, DB plans could be funded to a $90,000 annual retirement benefit. The maximum annual addition for defined contribution plans in 2007 is $45,000. Twenty years ago, the maximum annual addition amount was $30,000. (sources: BTN Research, Barron’s, S&P, Russell, MSCI and IRS)