Interesting Data

1. FOR THE YEAR – Although the S&P 500’s raw index value dropped fractionally during calendar year 2011 (falling from 1257.64 on 12/31/10 to 1257.60 on Friday 12/30/11), the total return gain of the index was +2.1% for the entire year (i.e., including the impact of reinvested dividends). The S&P 500 stock index has been positive on a total return basis in 8 of the last 9 calendar years. The 1 down year that occurred since 2003 was a 37.0% tumble in 2008. 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).   

2. THE LONG-TERM AVERAGE – The S&P 500 stock index has gained an average of +9.3% per year (total return) over the last 50 years (i.e., the years 1962-2011). No single calendar year actually gained +9.3% in the last half century. The closest that any year came to the +9.3% historical average was in 1993 when the stock index gained +10.1% for the year (source: BTN Research).

3. UP vs. DOWN – The split between “up” and “down” days for the S&P 500 over the last 50 years (i.e., 1962-2011) is 53% “up” and 47% “down.” The split during calendar year 2011 was 55/45, a surprising result considering that the year’s total return gain was just +2.1% (source: BTN Research).  

4. BIG DAYS, SMALL YEAR – There were 13 trading days during calendar year 2011 (i.e., an average of 1 day every 4 weeks) when the S&P 500 gained more than +2.1% (total return) in a single trading day (note that +2.1% was the index’s total return gain for the year). The last of the 13 days was on 12/20/11 (source: BTN Research).

5. INSIDE THE INDEX – 58 of the 500 individual stocks (i.e., 12% of the stocks) in the S&P 500 gained at least +25% in 2011. 155 stocks (i.e., 31% of the stocks) gained at least +10%. 266 stocks (i.e., 53% of the stocks) finished the year with a stock price lower than where it started the year (source: BTN Research).  

6. IN-TO-OUT AND OUT-TO-IN – The top-performing individual stock in the S&P 500 in 2011 (based upon a +101% gain for the year) was ranked # 461 (out of 500 stocks) in 2010 while losing 13%. The top-performing individual stock in the S&P 500 in 2010 (based upon a +140% gain for the year) was ranked # 393 (out of 500 stocks) in 2011 while losing 20% (source: BTN Research).  

7. FEW STOCKS, LARGE IMPACT – The 10 largest stocks in the S&P 500 made up 20% of the total stock market capitalization of the index as of 12/31/11. Thus, 2% of the stocks in the index (i.e., 10 out of 500) had 20% of the total value of the index. The S&P 500 is a market-cap weighted index (source: S&P).  

8. MISSING THE BEST – The total return for the S&P 500 was +2.1% (total return) in 2011. If you missed the 3 best percentage gain days last year, the +2.1% gain falls to a 10.7% loss (source: BTN Research).  

9. AVOID THE WORST – The total return for the S&P 500 was +2.1% (total return) in 2011. If you avoided the 3 worst percentage days last year, the +2.1% gain rises to +20.2% gain (source: BTN Research).

10. ALL IN AUGUST – The 3 worst percentage days for the S&P 500 in 2011 occurred on 8/04/11, 8/08/11 and 8/18/11 (source: BTN Research).  

11. FROM THE MARCH 2009 LOW – Since dropping to a bear market low on 3/09/09 (i.e., approximately 34 months ago), the S&P 500 has gained +97.2% (total return) through the close of trading last Friday 12/30/11 (source: BTN Research).

12. SMALL-CAPS – The small-cap Russell 2000 stock index lost 4.2% (total return) in 2011. The small cap index had gained +27.2% in 2009 and +26.9% in 2010. The Russell 2000 index is an unmanaged index of small-cap securities which generally involve greater risks (source: Russell).  

13. NASDAQ PERFORMANCE – The NASDAQ was down 1.8% in 2011 (not counting the impact of dividends). The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system (source: BTN Research).

14. FOREIGN STOCKS – The international stock index EAFE lost 12.1% (total return) in 2011. The EAFE index is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks including currency fluctuations, differing financial accounting standards and possible political and economic volatility (source: BTN Research).

15. OIL PRICES – The price of oil ended 2010 at $91.38 a barrel, rose to a 2011 closing high of $113.93 a barrel on 4/29/11, and ultimately finished 2011 at $98.83 a barrel, an +8% price increase during the year (source: New York Mercantile Exchange). 

On Predictions

1. LONE RANGER – In the 12/20/10 issue of Barron’s, 10 Wall Street equity strategists forecasted where the S&P 500 would finish 2011. 9 of the 10 prognosticators predicted the S&P 500 would end the year at 1325 or higher (note that the index ended 2010 at 1258). Douglas Cliggott (Credit Suisse) was the lone dissenter from the majority belief, forecasting a 1250 year-end value for the S&P 500. The stock index finished 2011 at 1258. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: Barron’s).      

2. ALMOST A BEAR – 98 of 152 money managers surveyed (64%) in the 4/25/11 issue of Barron’s believed that the US stock market would suffer a correction of at least 10% by 12/31/11. The S&P 500 achieved its peak 2011 close of 1364 just 4 days after their predictions were published (Friday 4/29/11). When the index closed at 1099 on 10/03/11, the S&P 500 had fallen 19.4% (source: Barron’s).  

3. HUMBLE PIE – Bill Gross, portfolio manager of the world’s largest bond fund, said on 2/15/11 that “inflation will go up and bond prices go down.” As of 2/28/11, Gross had sold all of his fund’s holdings in US Treasury debt in anticipation of rising interest rates. The yield on the 10-year Treasury note was 3.42% on 2/28/11. The yield on the 10-year Treasury note was 1.88% on 12/31/11 (source: Financial Times).  

4. BIG SURPRISE – 13 Wall Street bond market forecasters predicted on 12/20/10 where the yield of the 10-year Treasury note would be on 12/31/11. 12 of the 13 strategists believed the yield, which was 3.29% as of 12/31/10, would be at least 3.50% as of 12/31/11. The actual 12/31/11 yield was 1.88% (source: Barron’s).

5. EXAGGERATION – Financial analyst Meredith Whitney predicted on the television show “60 Minutes” (aired on 12/19/10) that there could be “50 to 100 sizeable (municipal bond) defaults . . . within the next 12 months. This will amount to hundreds of billions of dollars’ worth of defaults.” Instead only $6 billion of defaults occurred last year. The municipal bond market is $3.7 trillion in size (source: CBS, Municipal Market Advisors).

6. ON THE MONEY – Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation (FDIC) from 2006-11, predicted on 11/10/09 that the number of bank failures “would peak in 2010 and then subside.” Nationwide bank failures were 25 in 2008, 140 in 2009, 157 in 2010 and 92 in 2011 (source: FDIC).  

7. NEVER IS A LONG TIME – Treasury Secretary Tim Geithner was asked on 2/07/10 whether the USA could ever lose its top credit rating. Geithner responded “that will never happen to this country.” S&P downgraded the United States from AAA to AA+ on 8/05/11. The USA had been AAA-rated for 70 years (source: ABC News).    

8. NO KIDDING – House Budget Chairman Paul Ryan (R-WI) predicted on 5/16/11 that a deal on increasing the USA’s $14.3 trillion debt ceiling limit would probably happen “at the last minute.” President Obama signed legislation to increase the debt ceiling just 10 hours before the 8/02/11 midnight deadline (source: WLS-AM).     

9. NO WAY – Former Shell Oil president John Hofmeister predicted in early January 2011 that gas prices would reach $5 a gallon by 2012. The nationwide average price of gasoline was $3.28 a gallon on 12/31/11, up 21 cents a gallon during the year (source: Newsweek, AAA).

10. MUCH TOO HIGH – Jeffrey Rubin of CIBC World Markets predicted on 6/23/08 that the price of a barrel of oil would reach $225 by 2012. The price of oil closed at $98.83 a barrel on 12/31/11 (source: Newsweek).

11. WE’RE STILL HERE – Radio host Harold Camping, 90 years old, predicted that “Judgment Day” (i.e., the final annihilation of the earth) would occur on 10/21/11 (source: USA Today).

12. OH SO RIGHT – Microsoft founder Bill Gates predicted in a 1/08/02 interview (i.e., 10 years ago yesterday) that the upcoming 10 years would be the “digital decade” and that consumers will come to “take (computer capabilities) for granted the way we take electricity or water for granted today” (source: Consumer Electronics Show).  

13. WE WISH – Forecasters at the 1893 Chicago World’s Fair (i.e., 119 years ago) predicted that by the year 2000, Americans would work no more than 3 hours a day (source: Wall Street Journal).

14. SERIOUSLY? – President George Bush predicted on 1/03/07 (i.e., 5 years ago) that the US government would reduce its annual budget deficit to zero by fiscal year 2012 (source: White House).

15. DISSING THE CARDS – Sports Illustrated predicted in its 4/04/11 issue that the Boston Red Sox would defeat the San Francisco Giants in baseball’s 2011 World Series. The St. Louis Cardinals were the 2011 series winner, beating the Texas Rangers in 7 games (source: Sports Illustrated).