We also want to encourage you to maintain your long-term view when making investment decisions. More important to understand is the fact that in spite of these large declines in stock market indexes, they have fallen back only to their levels of late 1998 or early 1999. No one likes to lose what they have gained over the last 2 to 2 years, but we must keep these losses in perspective and look at them within the context of the gains we have enjoyed over many years. Look at the chart below. It shows an index of U.S. common stock prices over the second half of the 20th Century.
Successful investors follow the latter course of action.
The answer, in our judgment, is better things than you have seen in 2000 and thus far in 2001, but not a replay of the unprecedented returns from both stocks and bonds that we saw during the last two decades of the 20th Century. Our economy remains fundamentally strong. It is the most competitive and productive economy in the world. Once the correction in our financial markets is complete, we should expect returns more in line with historic norms. For stocks the returns should be a few percentage points higher, but the fluctuation from year to year in stock returns will be greater than for bond returns as it has been both last year and this.