RETURNS OVER 20-YEAR PERIODS VARY SIGNIFICANTLY; …

Change In P/E Ratio (Beginning To End)

Rolling 20 Yr Change In S&P 500 (annual rate)

RETURNS OVER 20-YEAR PERIODS VARY SIGNIFICANTLY; AFFECTED BY THE STARTING P/E RATIO

20-YEAR ROLLING STOCK MARKET RETURN (blue/left) & CHANGE IN P/E RATIO (red/right): 1919 - 2018

20%

80

70

15%

60

50

10%

40

30

5%

20

10

0%

-

(10)

-5%

(20)

1919 1924 1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014

20-Yr Annualized Return (S&P 500 Total Return, Including Dividends)

Change In P/E10 (Beginning to End)

P/E10 At The Start Of The 20 Years

20 Yr Stock Market Based Upon Starting P/E Ratio (1900-2018) 45

20 Year Periods Ending 1919 - 2018 (100 periods)

40 35 30 25 20 15 10

5 0%

5%

10%

15%

Annual Total Return Over 20 Years

20%

DECILE

1 2 3 4 5 6 7 8 9 10

TOTAL RETURNS BY DECILE RANGE

FROM

TO

3.1% 6.7% 7.2% 7.5% 8.2%

6.6% 7.2% 7.3% 8.0% 8.9%

9.3%

10.8%

10.9%

11.4%

11.5%

12.8%

13.0%

14.0%

14.0%

17.1%

S&P500 DECILE

AVG

5.2% 6.9% 7.3% 7.7% 8.5% 9.9% 11.2% 12.1% 13.7% 15.4%

AVG BEGIN

P/E

18.2 17.1 15.3 16.6 16.7 17.5 14.8 11.9 11.9 10.1

AVG END

P/E

9.2 12.1 13.2 13.5 18.4 19.3 18.5 19.1 21.6 28.6

Note: P/E ratio based upon average 10-year real EPS (P/E10)

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