Articles | The Weekly Acorn
These helpful articles are provided weekly to the clients we serve.
A Potpourri of Numbers
A LONG RUN - The S&P 500 lost 0.3% (total return) in the 1930s (an aggregate return for the 10 years, not per year). The next 6 decades (1940s through the 1990s) each produced positive returns. 3 of the 6 decades had gains of at least +400%. The decade of the 2000s was down 9.1%. 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).
BULL AND BEAR - Since bottoming on 3/09/09 (i.e., approximately 1½ years ago), the S&P 500 has gained +57.4% through the close of trading last Friday 8/27/10 (change of the raw index not counting the impact of dividends). During this nearly 18 month bull market, the stock index has also experienced 6 different declines of at least 5%, including a 16.0% drop (source: BTN Research).
DOWN BUT NOT OUT - During the 2002-07 bull market for the S&P 500 which produced a gain of +101% (change of the raw index not counting the impact of dividends), the stock index suffered through a 14.7% drop just 5 months into what ultimately became a 5-year long bull market (source: BTN Research).
NEXT MONTH - Although September has been the worst performing month for the S&P 500 in the last 20 years (i.e., 1990-2009) with an average loss of 0.7% (total return), the stock index gained +3.7% during September 2009 (source: BTN Research).
NEW HEALTH CARE LAW - The provision in the health care reform (signed by President Obama on 3/23/10) that allows a young adult to stay on his/her parents' plan until age 26 becomes effective on 9/01/10. For plans that operate on a calendar year basis, this new law becomes effective on 1/01/11 (source: White House).
WAGES - The adjusted gross income required to rank in the top 1% of US taxpayers increased +6.2% per year from 1980 through 2007 (the last year for which data has been released), rising from $81,000 to $410,000. The adjusted gross income required to rank in the top 50% of US taxpayers increased +3.5% per year from 1980 through 2007, rising from $13,000 to $33,000 (source: Tax Foundation).
NO COMMUTE FOR MY JOB - An estimated 35 million people work predominately from their homes, equal to 25% of the 139 million employed Americans (source: The Telework Coalition, Department of Labor).
A SECOND CHANCE - A total of 781,160 individuals filed for bankruptcy protection during the first 6 months of 2010, an average of 4,316 per day and 99,943 greater than the 681,217 filings from the first half of 2009. 73% of the 781,160 filed for Chapter 7 protection as opposed to Chapter 11 or 13 (source: Amer. Bankruptcy Institute).
HELP WANTED - It has now been more than 50 months since Federal Reserve Board of Governor member Mark Olsen quit. Olsen resigned on 6/19/06. Board member Frederic Mishkin resigned on 8/31/08 or 2 years ago. Both slots remain vacant as of today. A 3rd board member, Donald Kohn, announced his intention to resign on 3/01/10 but has yet to leave. There are traditionally 7 members of the Board of Governors (source: Federal Reserve).
DEBT - The CBO is projecting a fiscal year 2010 (i.e., the 12 months ending 9/30/10) budget deficit of $1.34 trillion. Combined with the actual $1.41 trillion deficit from fiscal year 2009, the last 2 years will have created $2.75 trillion of debt. The 17 fiscal years from 1992 through 2008 created $2.62 trillion of debt (source: White House).
JUST SEVEN YEARS - Even though many homebuyers take out a 30-year fixed rate mortgage when buying a home, few people keep the mortgage for the entire 30 years. The average lifespan of a 30-year fixed rate mortgage is only 7 years (source: Financial Times).
CASH OUT - Only 19% of American workers plan to use the equity in their primary residence to finance their retirement by either selling the home, getting a reverse mortgage or taking out a home equity loan (source: SOA).
HOT STUFF - The national average temperature in July 2010 was 75.54 degrees, the 18th hottest month in history. Weather data has been collected since 1895 (source: National Climatic Data Center).
MORE THAN ONE-THIRD - 37% of the 6.8 billion people in the world live either in China or India (source: World Health Organization).
BASEBALL AND BUSINESS - The Texas Rangers major league baseball team was purchased on 8/05/10 in a bankruptcy auction for $593 million. The largest unsecured creditor of the team is Alex Rodriguez (the current Yankee is owed $24.9 million). A group of investors including Hall of Fame pitcher Nolan Ryan form the new ownership team. Former President George Bush (#43) was part of a group of investors that bought the Rangers in 1989 for $89 million before they sold out in 1998 for $250 million (source: BTN Research).
Hopefully you can work at least one of the above numbers into a conversation at a backyard barbeque this weekend. Enjoy, and be safe.
Sincerely,
The Charter Oak Team
