Investing is a Marathon, not a Sprint
A 20-year overview of the stock and bond market

In any investment program, it is important to maintain a long-term horizon, and not to place too much emphasis on short-term performance. The following charts illustrate the fluctuations of the stock and bond markets and the growth that would have been achieved by investing in these markets over the past 20 years. 

• The Russell 3000 Index measures the performance of the 3000 largest U.S. companies based on total market value, which represents approximately 98% of the investable U.S. equity market.
• The Lehman Aggregate Bond Index is used as an indicator of bond market performance. It includes a broad selection of fixed income securities including U.S. government and agency bonds, corporate bonds, mortgages, and asset-backed securities, such as car loans and other forms of secured bank loans. 

The first chart, titled Stock and Bond Market Returns, shows that investors have achieved positive returns from both stocks and bonds in most of the last 20 years—16 of 20 years for stocks, 18 of 20 years for bonds. However, returns varied significantly from year to year.

• One-year returns of the Lehman Aggregate Bond Index have ranged from -2.9% in 1994 to 36.8% in 1995. 
• Stock market returns, measured by the Russell 3000 Index, have ranged from a high of 32.2% in 1985 to -21.6% in 2002. 
• The years 2000 - 2002 represented the first time the stock market has been down for three consecutive years since the 1929 - 1932 period, when the stock market (measured by the S&P 500 Index) had negative returns for four years in a row.

Stock and Bond Market Returns, 1983-2003

The next chart presents the same stock and bond market data, but with annual returns of The General Board's Multiple Asset Fund (and its predecessor, the Diversified Investment Fund), beginning in 1983. Notice that, during almost every year, the Fund's return is between that of the stock index and the bond index. This illustrates the value of diversification. With many types of assets in a portfolio, it is reasonable to expect year-to-year fluctuations to be more moderate than if a portfolio is concentrated in any one type of asset.

Long-Term Returns from Stock and Bond Market
and The General Board Multi-Asset Fund

The chart below shows that, even with these wide fluctuations in annual returns, long-term investors in either the stock or the bond market have prospered.

• An investment of $1000 at the beginning of 1983 would have grown to $11,611 by the end of September 2003 if invested in the Russell 3000 Index, or to $6,483 if invested in the Lehman Aggregate Bond Index. 
• To illustrate the purchasing power of investments at these returns, we show also the progression of $1,000 at the rate of inflation, as measured by the Consumer Price Index, published by the U.S. Department of Commerce. After a period of high inflation in the 1970s, the inflation rate has been moderate over the last 20 years, averaging 3.2% per year from 1983 through 2002. Both stock and bond returns have consistently surpassed the rate of inflation during this period.

Growth of $1000 Invested in Russell 3000 and Lehman Aggregate Index, 1983 - 2003

Disclosure: Past performance is not a predictor of future results. The General Board highly recommends that participants consult with a fee-only financial planner to develop a savings plan that is best suited to the participant's individual life circumstance and risk tolerance.