1. LOOKING BACK – Over the 300 months ending 2/28/13 (i.e., the last 25 years), the S&P 500 has been up 64% of the months and down the other 36% of the months. The period includes the 2000-02 bear market (down 49%) and the 2007-09 bear market (down 57%). 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. NOT LINEAR – $1 invested in the S&P 500 stock index on 5/31/95 in a tax-deferred account would have nearly quadrupled in value to $3.95 on a total return basis by 2/28/13 or after 17 years, 9 months. However the original $1 doubled in value to $1.94 by 1/31/98 (i.e., after just 2 years, 8 months) and then it took another 15 years and 1 month for the total to double again to $3.95. This mathematical calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment. Actual results will fluctuate with market conditions and will vary (source: BTN Research).
3. RECESSIONS AND BEARS – Of the 11 recessions that have occurred in the last 65 years, 8 have occurred in tandem with stock bear markets (i.e., at least a 20% decline in the S&P 500), including the last 4 recessions (source: National Bureau of Economic Research).
4. NO TUMBLE – As of 3/18/13 (today), the S&P 500 has gone 531 days (calendar days, not trading days) without experiencing a 10% correction, the 6th longest streak in the last 50 years (source: BTN Research).
5. OUT vs. IN – In spite of the fact that the USA had a $540 billion trade deficit in 2012 (imports in excess of exports), we were able to offset that outflow of dollars by attracting $520 billion of foreign capital into our stocks and bonds. Thus, for every $10 that left the USA because of excessive buying of foreign imports, $9.63 came into the USA as foreigners bought American financial assets (source: Commerce Department, Treasury Department).
6. NOT QUITE FREE TRADE – The United States exported more goods and services in 2012 to the countries of Japan and the Netherlands ($110.7 billion of exports to the 2 countries combined) than we exported to China ($110.6 billion). The population of China (1.32 billion people) is 9 times the size of the combined 145 million person population of Japan and the Netherlands (source: Department of Commerce).
7. GETTING OLDER – Life expectancy at birth of Americans has increased by 10.5 years in the last 60 years (i.e., 1950-2010), reaching 78.7 years today. Thus since 1950, life expectancy at birth has increased by 2 months every year (source: Center for Disease Control).
8. GET YOUR OWN – Only 1 in 7 Americans seniors (14%) age 72 and older believe that they owe their children or grandchildren an inheritance (source: Allianz).
9. AND BORROW WE DO – The yield on the 10-year Treasury note was 1.76% on 12/31/12. The yield on the 10-year Treasury note was 3.82% on 12/31/02. Thus for the same annual cost of money, our government can borrow +117% more money today than we did 10 years ago (source: BTN Research).
10. SMALL AMOUNT – An estimated 3,780 decedents in calendar year 2013 (out of 2.4 million projected deaths this year) will generate $14.2 billion of federal estate tax receipts for the US government, just ½ of 1% of our estimated annual tax revenue (source: Tax Policy Center).
11. TAX DOLLARS – Tax receipts collected by the US government through 5 months of fiscal year 2013 (through 2/28/13) are up +$117 billion (+13.1%) vs. the same 5 months in fiscal year 2012 (source: Treasury Department).
12. A CENTURY AGO – The 16th Amendment to the US Constitution was ratified on 2/03/1913 (i.e., 100 years ago last month), giving Congress the right to impose individual income taxes on American citizens. The top marginal tax rate was 7% in 1913 vs. 39.6% in 2013 (source: Internal Revenue Service).
13. OVERSPENDING – Our nation’s outstanding debt, $16.433 trillion on 12/31/12, rose to $16.687 trillion as of 2/28/13, an increase of $4.3 billion a day for the first 2 months of 2013 (source: Treasury Department).
14. BORROWING – Total consumer credit nationwide (i.e., consumer debts excluding home mortgages and home equity loans) increased by $153 billion over the 12 months ending 1/31/13, equal to $1,333 of debt increase for each of the 114.8 million households in the country (source: Federal Reserve).
15. LOTS OF K’s – Sandy Koufax struck out 311 more batters than he walked during the 1965 season for the Los Angeles Dodgers, going 26-8 with a 2.04 ERA. Justin Verlander of the Tigers led the majors with 239 strikeouts during the 2012 season (source: Major League Baseball).