Financial Tip Of
The Month
Learn about historical
returns and market
fluctuations.
LISA LONDON
Special to The Jewish News
L
ast year, the U.S. stock mar-
ket (as measured by the S&P
500) rose 33.4 percent, the
11th best year in history.
Two years earlier, stocks returned 37.6
percent. Sandwiched in-between was a
not-so-shabby 23 percent increase.
While the run-up in stock prices over
the past few years has benefited
investors, it has a negative implication
- many investors have come to
expect such returns in the future.
In periods of skyrocketing stock
prices, it is important for investors to
avoid becoming overly enthusiastic.
Let's put the outstanding returns of
recent years into historical perspective.
Average Annual Returns
- During the three-year period
Lisa London is vice-president-invest-
ments of Smith Barney, Inc., in
Southfield. She is The Scene's monthly
financial columnist.
1995-1997, the S&P 500 delivered an
average annual return of 31.2 percent.
However, in the previous three years
the S&P 500 returned an annual aver-
age of only 6.3 percent or approxi-
mately one-fifth of the return of the
1995- 1997 period.
* Over the 15-year period ending
in 1997, the S&P 500 recorded an
average annual return of 17.5 percent,
which is the second best 15-year
return on record. However, in the 15
prior years the S&P went up only 7
percent annually on average, approxi-
mately two-fifths of the more recent
15-year period.
* The arithmetic average one-year
return of the S&P 500 from 1926
through 1997 was just shy of 13 per-
cent, approximately two-fifths of the
return of the 1995-1997 period.
Another unusual characteristic of
the 1995-1997 stock performance is
the scarcity of negative price fluctua-
tion. Declines in stock prices over the
period were only brief and occasional.
Only once did the stock market fall
10 percent or more. Historically,
downturns of at least 10 percent have
been much more frequent.
Recovery Periods
Michigan Jewish Singles Network,
sponsored by Temple Beth El, invites
singles to dinner (6:30 p.m.) and
Shabbat services (8 p.m.) Cost: $13.
For reservations, call Jackie or Rachel,
(248) 851-1100.
Be a part of the parade! Young Friends
of Woodward go backstage to preview
the Parade Company, producer of the
Thanksgiving parade. 11 a.m.-2 p.m.
at the Parade Studio, 9600 Mt. Elliott,
Detroit. (248) 258-2825.
Saturday, Sept. 26
The JPS 30-50s, and Hillel of Metro
Detroit, will be volunteering for the
Honey and Apple program in con-
junction with the J.E.F.F. program.
1:30 p.m. For JPS, call Cindy, (248)
542-9166; for HMD call (313) 577-
3459.
The JPS 30-50s sponsors a Havdalah
dinner at David Silver's home in
Troy. 7:30 p.m. Cost: $8. (248) 267-
8504.
October 1987
November 1987-8.
January 1990-6.
August 1990
September 1990
June 1991
November 1991
March 1994
July 1996
March 1997
August 1997
Investors seem to be unfazed by
recently falling stock prices. A large
percentage of investors have begun to
Sunday, Sept. 27
Tuesday, Sept. 29
Kol Nidre Service hosted by the
Young Adult Shabbat Service. No tick-
ets required. Services begin at 7 p.m.,
at Adat Shalom Synagogue's Shiffman
Chapel. For information call, (248)
has performed beyond normal expec-
tations. In the past, such upturn
periods have always come to an end.
Since July 17, when the Dow
reached its record high of 9338,
stock prices have taken a beating. A
decline in stock prices should not
come as a surprise to investors, who
need to incorporate this possibility
into their expectations.
c__\
As long as investors keep focused
on long-term goals and objectives,
stock price performance can be viewed
in the proper prospective. Hopefully,
the exceptional returns of the last few
years will more than compensate for
any meaningful market decline.
❑
Percentage Gain And Loss
Stock Market Corrections
Friday, Sept. 25
Israel Party '98, kickoff for the 1999
UJA summer singles mission to Israel,
(ages 21-40). 8:30 p.m. At the home
of Michelle Rosenthal. Those who
sign up with a $100 deposit by Oct.
15 will be entitled to a $250 discount
on the price of the trip. Marc Berke,
(248) 203-1458.
view major drops as only a temporary
phenomenon. In previous years, major
price drops would scare away some
investors, but in today's investment
climate, it seems like just the opposite
occurs.
It may not be realistic to expect
the extraordinary returns to continue
indefinitely. Stock prices fluctuate,
and can trade in a narrow range with
little movement. But, in general, the
expected return of stock investments
is close to the long-term average
annual return, which for the 72 years
ending in 1997 was just under 13
percent.
In recent years, the stock market
Monthly
Drop
Following
6 Months
Following
12 Months
-21.52
19
71
-9.03
-4.92
-4.57
-4.13
-4.36
-4.42
-4.11
-5.60
5.5
15.8
10.1
15.9
24.8
14.2
12.3
5.3
24.2
26.3
17.6
14.7
23.2
8.4
26.9
31.3
13.4
18.4
15.6
52.1
48.0
TBD
Source: Consulting Group - Salomon Smith Barney
851-5100. To participate call Joe
Feldman, (248) 353-0307.
Steppin' Out. Cost: $310, including
accommodations and meals. (773)
509-8595.
Wednesday, Sept. 30
The JPS 30-50's sponsors a break-the-
fast dinner at Jackie Zameck's home in
Huntington Woods. 7:30 p.m. Cost:
$8. RSVP by Sept. 27, (248) 399-
2283.
Thursday, Oct 1
Yom Kippur Drive with Hillel of
Metro Detroit. Feed the hungry at Yad
Ezra. (313) 577-3459.
Oct 9-U
Biking in Saugatuck, with Steppin'
Our. Bike along the Lake Michigan
shoreline and room at a country inn
on the harbor with Chicago's outdoor
adventure group for Jewish adults,
Save The Date!
JARC's 6th annual Young Adult
Pre-Glow will be Thursday, Nov.
5, before a benefit performance of
"Evita" at the Masonic Temple.
For information, call (248) 352-
5272.
Mentors Needed
The Young Friends of Woodward
are looking for young adults inter-
ested in serving as mentors to
fourth and fifth graders at
Edmonson Elementary in Detroit.
For information, call Robin
Kaufman,(248) 258-2825.
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