1) You are an owner of companies that provide customers with goods and services.
2) Your return comes from their success and is payment for sharing their risk of failure.
3) Their success is reflected in their market values and the dividends they pay you
4) As a business owner, your returns will go up and down with their business fortunes.
5) US Large Companies is an index of leading public companies in the US economy.
6) It represents about 75% of US public companies – weighted by market value.
7) They are the companies in the industries that drive the US economy at any point in time.
8) This index has provided a 10% annualized return (7% over inflation) from 1926 to 2012.
9) In most years it has gone up, 63 of the 87 years or 72% of the time.
10) The annual return has been as high as 53% and as low as minus 43%.
11) Within a given year, the bulk of the return has often been earned on a handful of days.
12) There have been ten-year periods when investors have earned about 20% per year.
a. Since the Depression, there have been two such peak periods.
b. These peak periods were the ten years ending in 1958 and more recently in1999.
13) There have been ten-year periods when investors have earned essentially no return.
a. Since the Depression, there have been three such trough periods.
b. These trough periods were the ten years ending in 1939, in1974 and more recently in 2008.
14) Investors have had as much as a 50% loss from their peak value.
a. Since the Depression, this has happened on three separate occasions
b. It took place over two years in the early 70s, over three years in 2000 and over about twelve months in 2008.