2011 End-of-Year Stock Market Update

Just to refresh your memory, here are a few market-moving stories from the past year.

• March: Powerful Quake and Tsunami Devastate Northern Japan - NYTimes ...
  
• May: Bin Laden Is Dead, Obama Says - NYTimes.com
  
• August: United States loses prized AAA credit rating from S&P | Reuters
  
• Sept: Treasuries twisting, with 10-year yield at record low (CNN)
  
• Dec: S&P Puts 15 Euro Nations on Watch for Downgrade Amid Sovereign-Debt Crisis (Bloomberg)
  

Monthly Stock Market Closes for 2011

December, 4th Quarter, Year-To-Date & Recovery-To-Date Review

Previous posts have demonstrated that the market periodically experiences "long, flat periods." This certainly seems to be one of those. Perhaps it was in that spirit that the S&P managed to end 2011 0.02 points away from where it ended 2010!

The DJIA (Dow Jones Industrial Average) fared somewhat better, closing the year at 12,217.56.  Here are some key market stats.

• From Prior Month Close of 12,046: The Dow is up 172 points (1.4%)
  
• From 3rd Quarter Close of 10,913: Up 1304 points (12.0%)
  
• From 2010 Close of 11,578: Up 640 points (5.5%)
  
• From 52-Week Low of 10,655 on October, 3 2011: Up 1562 points (14.7%)
  
• From Crash Low of 6547 on March 9, 2009: Up 5671 points (86.6%)
• From 52-Week High of 12,811 on April 29: we're down 593 points (4.6%)
  
• From All-Time High of 14,165 on Oct 9, 2007: the Dow is still down 1947 points (13.7%)  

For total return info (i.e., including dividends), see Stock Market Total Return 19xx-2011. 
For other related results, see November 2011 stock market results, January 2012 stock market results, 2010 Year-End Update and 2012 Year-End Update.

The Dow year-end dividend yield was 2.6%.  Ten-year Treasury Notes ended yielding 1.89%, not far off the low yield for the year (and apparently all-time low) of 1.72%.  The Dow Index 25-year moving average closed the year at 7741.

S&P and Nasdaq Year-end Closes

To complete the picture, for the year-end post let's take a look at where we are compared to the all-time highs on a couple of other key indexes:

• S&P 500: closed 2011 where it began the year, at 1258 -- still 20% off its all-time high close of 1565 set October 9, 2007
• Nasdaq: closed 2011 at 2605, down 1.8% for the year, -- and, 48% off its all-time high close of 5049 set March 10, 2000. Almost 12 years later, we're still down close to 50% from the highs set during the dot-com era! At the time, I remember people questioning whether we were in a bubble. Not much question now is there?....
  

At the end of the crash, the Dow had lost about 54% of its value (from the all-time high). For an explanation of how it can be up over 80% since then and still be well below the all-time high, see The Importance of Avoiding Large Losses.

The Next 10 Years

Early this year, my stock market projection model projected 10-year returns in the neighborhood of 5%. As a result of this year's on-trend performance, the 2012 projection is likely to be essentially the same.

My preliminary 10-year projection is in the neighborhood of 5.3%.  Since my model is earnings based, I'll have to wait for 2011 earnings data before finalizing the projection.  I'll post a formal update around the end of the first quarter.

Related Posts

100 Years of Stock Market History: Includes 100-year chart and discussion of the long flat periods.
Dow Yearly Returns: 1929-2010 : bar graph of yearly total returns (i.e., including dividends)
What has the range of returns (minimum & maximum) been for 1,2, 3, ... 100-year periods?
10-Year Stock Market Projection shows how expected returns have changed over the last 10 years.
100 Years of Interest Rate History: graph of Treasury Note interest rates since 1900
Who's Afraid of a Sideways Market?: Interesting perspective on long flat periods from Morningstar.
Three Scenarios for the Economy (and the stock market) includes links to additional relevant articles by Bill Gross, Nouriel Roubini, Jeremy Grantham, John Hussman, and others.
For lists of other popular posts and an index of stock market posts, by subject area, see the sidebar to the left or the blog header at the top of the page.
Copyright © 2011       Last modified: 1/4/2013

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