Vincent Farrell, Jr. is Chief Investment Officer of Soleil Securities, a New York based investment management company. Over his long career on Wall Street, he has worked for numerous distinguished firms. Mr. Farrell graduated from Princeton University in 1969 and received his M.B.A. from the Iona College Graduate School of Business in 1972.
The Peter Falk character in the wonderful comedy “The In-Laws” worked for the CIA. He said the benefits were great as long as you lived long enough to collect. The aftermaths of bear markets can be great as well. You just have to be around long enough to collect. Paul Price, writing in “Seeking Alpha”, took the 10 worse calendar year markets and figured the returns for the following year and also the subsequent five year annualized returns. It looks like this:
Year – Decline – Following year – Five year annualized return
1930 -24.9% -43.3% +3.1%
1931 -43.3% -8.2% +22.5%
1937 -35% +31.1% +4.6%
1941 -11.6% +20.3% +17.9%
1957 -10.8% +43.4% +13.3%
1966 -10.1% +24% +8.4%
1973 -14.7% -26.5% +4.3%
1974 -26.5% +37.2% +14.8%
2001 -11.9% -22.1% +6.2%
2002 -22.1% +28.7% +12.8%
The average five year return is 10.79%. Notice that all five year plots are positive even the five years that began 1931 with a negative 43% and also the five years that began 1974 with a fall of 26.5%. Again thanks to Paul Price. I didn’t confirm these numbers independently. I’m passing them along and believe they are price only. Dividends not included.
This communication has been prepared for informational purposes. Nothing in this communication should be construed as an offer or a solicitation for the purchase or sale of any financial instrument. The text of this communication is not a research report as defined by NASD Rule 2711.