Edward Renshaw
Professor of Economics
State University of New York at Albany
An up-date of a working paper that has tentatively been scheduled for publication in the September/October, 1995 issue of the Financial Analysts Journal.
In this essay we examine some evidence in support of the hypothesis that the US stock market is more stable than it use to be and then address the more intriguing question of why? Among the suspects are a more stable economy, its changing structure, the invention of portfolio balance models, the globalization of the securities market and a maturing baby boom population that is more aware of the fact that common stocks have outperformed bonds over long periods of time.
Some of the most impressive evidence in support of a more stable market for common stock can be obtained by examining the annual high/low trading ranges for the S&P composite stock price index for the 67 year period for which daily closing prices are available (Table 4.3S).
During 1992 and again in 1993 the S&P index established new historic records for a narrow high-low trading range. See Table 2.1S. The trading range for 1994 of (1.098 or 9.8 percent) was only slightly greater than the previous record for 1993. This was the first time that the S&P index was confined to a narrow trading range for three years in a row.
It should be noted that the returns for the 16 years with the smallest high/low ratios have all been positive. The not so bad returns in these years makes it worth while to investigate the circumstances that might help to produce a narrow trading range.
The data in the third column of Table 2.1S indicate that narrow trading ranges have occurred most frequently during the second year after a recessionary trough in business activity as defined by the National Bureau of Economic Research (NBER). The four cases of a trading range under 1.200 that occurred during the first year after a recessionary trough (1959, 1971, 1977 and 1992), were all followed by a second year with a relatively small trading range.
Another variable that should be taken into consideration in trying assess the probability of a narrow trading range is the dividend yield associated with the S&P index. The six smallest high/low ratios in Table 2.1S were all preceded by a year-end closing dividend yield under 3.20 percent.
On September 20, 1995 the S&P composite stock price index registered a new historic closing high of 586.77 and established an all time record of 1,162 trading days for a series of new highs without an intervening decline of nine percent or more. During this period the largest cumulative new high decline of 8.9 percent was recorded over the slightly more than two month interval from February 2 to April 4, 1994 when the Federal Reserve began to gradually raise short term interest rates in an effort to prevent an acceleration of the inflation rate and slow the economic growth rate to a more sustainable pace.
The previous record for a series of new highs without a "correction" of nine percent or more is associated with the 409 day trading period from January 21, 1985 to September 4, 1986. See Table 2.2S. That stability record was temporarily marred by a cumulative decline of 9.4 percent over the next 17 trading days and was eventually followed by the biggest one day decline in the S&P index of 20.5 percent on October 19, 1987.
The data in the last two columns of Table 2.2S are not inconsistent with the hypothesis that a new high bull market will last longer, on the average, if the peak to peak gain per trading day is small than if it is large. One reason the February-April 1994 decline in the S&P index was so moderate may very well have been the rather anemic average peak to peak trading day gain of .041 percentage points from February 13, 1991 to February 2, 1994. At that point in history there had been only one new high bull market--the Vietnam War impacted, slow economic growth and transition bull market of 1967--with a more anemic average trading day gain.
Does the subdued character of the 1991-9? bull market and its resistance to higher interest rates and other types of bad news that have ended previous bull markets imply that there has been a fundamental change in the character of the stock market? If so, what is the new found stability related to?
In a compendium on Business Cycle Indicators, which was published in (1961) Geoffrey Moore found that only the net change in the number of operating businesses was a better leading indicator of business cycles than stock prices. The S&P composite stock price index was classified as being a leading indicator 31 times, roughly coincident 14 times, and a lagging indicator only 5 times.
The destabilizing influence of the business cycle on the stock market can be vividly illustrated by examining the highest and lowest yearly financial returns for the S&P stock price index during each decade since the stock market crash of 1929. See Table 2.3S. The best returns have consistently occurred during years containing an NBER trough in economic activity. The worst return years (1931 and 1974) were recessionary years containing neither an NBER peak or a trough. Two of the lowest return years (1941 and 1966) are associated with business expansions that may have been prolonged by major wars. The remaining low return years (1957, 1981 and 1990) are associated with years containing an NBER peak in business activity.
It should be noted that there has been a downward drift in the high/low return spread in column (3) of Table 2.3S from 94.7 percentage points in the 1930s to only 33.1 percentage points (so far) in the 1990s. It should also be noted that the yearly financial losses associated with the 1981 and 1990 peaks in business activity (-4.8 and -3.1 percent) were quite modest in comparison to the worst case double digit losses experienced during the four preceding decades.
One reason for hoping that the stock market will continue to be more stable in the future than was the case on the average from 1930-79 is evidence in support of the hypothesis that business expansions are lasting longer than they used too. The nine business expansions identified by NBER from October 1945 to July 1990 have an average duration of 50 months. This can be compared to an average duration of only 29 months for the 22 expansions from 1854-1945. The business expansion which began in March 1991 began to increase the average duration of post World War II expansions in June 1995.
There is another interesting way show that the stock market has a tendency to mirror the behavior of the economy. Since the great depression of the 1930s there has been an upward trend in the number of year to year growth rates for real GDP in the zero to 4.1 percent range and a notable reduction in the number of exuberant years with growth rates for real GDP in excess of 4.1 percent. During the same period of time there has been a decline in the number of years with negative financial returns for the S&P index and an increase in the number of years with financial returns in the zero to 9.9 percent range. See Table 2.4S.
Growth rates for the US economy in excess of 4.1 percent are an endangered specie. The last such growth rate occurred way back in 1984. The growth of the population aged 16 and over, from which our official labor force is recruited, has slowed from an average rate of over 2.1 percent in the 1970s to 1.1 percent in the 1990s. The growth of real GDP per worker has declined from over 2.0 percent per year in the 1950s and 1960s to under one percent in the 1970s and 1980s before recovering to about one percent, on the average, during the first half of the 1990s. With female participation in the labor force approaching a condition of saturation, it doesn't seem likely that the US will ever experience another super growth year unless it gets involved in a very severe or very prolonged recession.
Fewer super growth years, should lessen the justification for exuberant stock markets in the midst of prolonged business expansions, such as the 106 month expansion from February 1961 to December 1969 and the 92 month expansion from November 1982 to July 1990. Both of these expansions were pitted by several new high declines of nine percent or more in the midst of prosperity. See Table 2.2S.
The evidence in support of a more stable economy that might spill over and help to stabilize the stock market is most apparent when one examines cyclical fluctuations in nonagricultural payroll employment, (Business Cycle Indicator series 41) and its major components: employment in goods producing industries and service industries. Since the mild recession of 1960-61 employment recessions have been largely confined to layoffs in goods producing industries. See Table 2.5S.
The good news with regard to employment in manufacturing is that automation and other improvements in productivity have reduced the share of total employment in goods producing industries by more than 50 percent since the post World War II peak in 1953. From March 1980 to March 1995 there was actually a net reduction of almost nine percent in the number of persons classified as being employed in goods production at a time when the total output of goods produced in the United States is estimated to have increased by about 50 percent.
The shrinking share of nonsupervisory workers in recession prone, goods producing industries has helped to moderate recent employment recessions in comparison to those which occurred from 1948-58. The expense of automating has also made it more advantageous for some industries, such as the automobile industry, to offer rebates rather than cut production and lay off skilled workers when consumer demand is weak. This should help to stabilize the demand for motor vehicles and lengthen business expansions.
Since the mild and rather unexpected recession of 1960-61 employment in goods producing industries has typically peaked out eight or more months in advance of peaks in total employment. The only exception, so far, was a four month lead time before the end of the abortive one year business expansion from July 1980 to July 1981 when the Federal Reserve was more preoccupied with ending the specter of double digit inflation than with the possibility of a near term recession.
The 17 month lead time for goods producing employment before the June 1990 peak in total payroll employment was probably one of the factors that encouraged the Board of Governors to lower the Federal funds rate by 1.56 percentage points between March 1989 and June 1990. While the reduction in short term interest rates wasn't sufficient to prevent the employment recession of 1990-92, there is a possibility that this recession wouldn't have occurred if it weren't for the oil price shock and economic uncertainty associated with Iraq's invasion of Kuwait in August 1990.
Since the peaking out of US oil production in 1970, the US hasn't experienced a negative growth rate for real GDP in any year that wasn't preceded by at least a 14.7 percent increase in the average first purchase price of domestic crude oil and a December-December decline in the Commerce Department's revised index of leading economic indicators amounting to at least one percent or more (Renshaw 1995).
Since the publication of Markowitz's monograph on Portfolio Selection in (1959) and Latane's article on "Criteria for Choice Among Risky Ventures" in the same year, it has become increasingly clear that the compound average return associated with a portfolio of risk assets with about the same prospects can be increased by rebalancing the portfolio from time to time to keep an optimal fraction of the portfolio invested in each type of asset. If there is no change in one's assessment of longer run prospects, some of the shares in those companies which have appreciated the most in value should be sold and more of the shares of under performing companies should be acquired.
The benefits from this type of rebalancing will be greater, other things equal, if the financial returns for the risk assets in the portfolio are not highly correlated with each other. Equities from different countries can be considered ideal candidates for rebalancing since they have sometimes moved in opposite directions.
While no one really knows the extent to which modern portfolio theory may have helped to stabilize the US stock market, there is not much doubt that the globalization of the world's securities markets has dramatically lowered yearly spreads for December to December percentage changes in the stock market indexes for the more industrial countries of the world. Eighty percent of the high-low spreads for the G-7 industrial countries in the last collum of Table 2.6S were equal to 35.5 percentage points or more from 1954-88. Since 1988 all of the spreads have been less than 35.5 percentage points.
There is an old saying that prediction is very difficult, especially when it pertains to the future. While a more stable economy and the globalization of the world's security markets does provide a basis for hoping that the S&P stock price index will establish some more new records for stability in the remainder of the this decade, it should be appreciated that bull markets do not last forever.
The recovery from the stock market correction of 1994 has been sustained in part by a "Tidal Wave of Retirement Cash" flowing into mutual funds (Schultz 1995). This money flow is steadier and isn't as likely to flee, forcing fund managers to dump equities at poor prices in the middle of a stock market correction so they can satisfy speculative withdrawals.
The two longest new high bull markets in Table 2.2S, were sustained to some extent by a steep yield to maturity curve for debt instruments. In (1986) Keim and Stambaugh found that the spread between the yields on low grade corporate bonds and one-month Treasury bills was of some value in predicting financial returns in both the stock and bond markets. Since 1941 the following year financial returns for the S&P index have usually been positive after a spread of 2.85 percentage points or more for the December yield on Moody's Baa Corporate bond index minus the last offering yield for 91 day Treasury bills. See Table 1.3S.
While yield to maturity curves have done a fairly good job of identifying some of the stock market crashes that have been associated with economic recessions, they aren't very reliable in warning investors about the possibility of a stock market correction in the midst of prosperity. A person who purchased a portfolio similar to the S&P index at the end of 1976, when the yield spread in Table 1.3S was equal to 4.82 percentage points, would have suffered a financial loss of 7.6 percent during the "correction" of 1977.
The slope of the yield to maturity curve also has the distinction of not providing investors with any warning about the stock market corrections of 1984, 1987 and 1994, when the Fed engineered other increases in short term interest rates in the current or preceding year in an effort to prevent inflation from getting out of hand.
At the end of 1992 the yield spread between Moody's Baa bond index and the Treasury bill rate had risen to the second highest year-end level since the beginning of World War II. During 1993 common stock provided investors with a current dividend yield almost as great as the return on savings accounts and money market funds. The steep yield to maturity curve and the prospect of longer run price appreciation provided investors with a strong incentive to move money out of maturing CDs into stock and long term bond funds.
In early 1995 the recovery of stock prices from the 8.9 percent correction from February 2 to April 4, 1994 was bolstered by large increases in corporate earnings. The four quarter earning total for the S&P composite stock price index increased by almost 40 percent from the fourth quarter of 1993 to the fourth quarter of 1994. The Fed's success at slowing the growth of economic activity during the first and second quarters of 1995, however, has helped to moderate the growth of earnings.
What one has to worry about in a steep yield to maturity and high growth in earnings environment is the possibility that inexperienced investors and money managers will loose sight of underling earnings and dividends and continue to pump money into stock funds until a major collapse of the market is inevitable.
Professor Vernon Smith (1988) and some of his associates have conducted some computer aided experiments which support the hypothesis that stock market booms followed by sudden crashes are more likely if a market becomes dominated by inexperienced traders. Their experiments are designed to test the theory that a stock's price is determined by investors' expectations of what dividend a share will pay. They found that inexperienced traders tend to lose sight of such fundamental determinants of value, speculate on whether price trends will continue, and often generate a boom followed by a crash.
From December 14, 1994 to July 27, 1995 the S&P index zoomed upward at an unsustainable annualized pace of more than 40 percent per year and recorded 51 new historic closing highs. During the same period of time the yield spread between Baa bonds and new issues of 91 day Treasury bills dropped below the cut-off value of 2.85 percentage points in Table 1.3S--providing investors with little assurance that the financial return for the S&P index would remain positive.
The unanswered question is whether inexperienced investors and money managers have taken control of the US stock market and are setting the stage for an old fashioned boom to be followed by a crash that will end the most prolonged new high bull market in the history of the S&P composite stock price index.
Persons who are hoping that there won't be another stock market crash in say October 1995 can perhaps take some comfort, however, in the fact that the stock market boom was supported to a considerable extent by a large increase in corporate earnings.
Keim, D. B. and R. F. Stambaugh (1986). "Predicting Returns in the Stock and Bond Market," Journal of Financial Economics, (17), pp. 357-390.
Latane, Henry (1959). "Criteria for Choice Among Risky Ventures," Journal of Political Economy, April, pp. 144-55.
Markowitz, Harry (1959). Portfolio Selection(New York: John Wiley).
Moore,Geoffrey (1961). Business Cycle Indicators(Princeton: Princeton University Press), vol. 1, Table 3.2, p. 56.
Renshaw, Edward (1995). "The Fed's Preemptive Strike and the Tricky Business of Inflation Forecasting," The Journal of Fixed Income, June, Table 12, p. 69.
Schultz, Ellen (1995). "Tidal Wave of Retirement Cash Anchors Mutual Funds," The Wall Street Journal, September 27, pp. C1 & C25.
Smith, Vernon and others (1988). "Bubbles, Crashes and Endogenous Expectations in Experimental Spot Asset Markets," Econometrica, 1988, pp. 1119-51.
Year Rank High/Low Years After Last Financial Return S&P Index
Ratio Business Trough Current Following
Year Year
1993* 1 1.097 2 9.9 1.3
1994* 2 1.098 3 1.3 ?
1992* 3 1.119 1 7.4 9.9
1959* 4 1.133 1 11.8 .3
1965* 5 1.135 4 12.3 -10.0
1964* 6 1.144 3 16.3 12.3
1944 7 1.150 6 19.3 35.7
1952 8 1.152 3 17.7 - 1.2
1951 9 1.153 2 23.4 17.7
1984 10 1.153 2 6.0 31.1
1956 11 1.154 2 6.4 -10.4
1960*P 12 1.155 2 .3 26.6
1979 13 1.157 4 18.4 31.5
1971 14 1.162 1 14.1 18.7
1988 15 1.169 6 16.3 31.2
1972* 16 1.172 2 18.7 -14.5
1953P 17 1.174 4 - 1.2 51.2
1977 18 1.180 2 - 7.2 6.4
1947 19 1.182 2 5.5 5.4
1976 20 1.186 1 23.6 - 7.2
1969*P 21 1.190 8 - 8.3 3.5
1963 22 1.197 2 22.5 16.3
*identifies narrow high/low trading ranges that were preceded by a year end dividend yield for the S&P composite stock price index of less than 3.20 percent.
P identifies a year containing a recessionary peak in business activity.
Source of basic data: Standard and Poor's Security Price Index Record.
% Change Peak-Peak
Date of Value S&P Index ------------ Duration Gain Per
-------------------------- --------------- Peak- Peak- Recovery Trading
Peak Trough Recovery Peak Trough Peak Trough to Peak Day
(1) (2) (3) (4) (5) (6) (7) (8)n (9)n
5/14/28 6/19/28 8/25/28 20.44 18.34 ---- -10.3 --- ----
11/30/28 12/08/28 12/31/28 24.28 21.92 18.8 - 9.7 78* .241
9/07/29 6/01/32 9/22/54 31.92 4.40 31.5 -86.2R 204* .154
9/23/55 10/11/55 11/14/55 45.63 40.80 43.0 -10.6 254* .169
3/20/56 5/28/56 7/16/56 48.87 44.10 7.1 - 9.8 87 .082
8/02/56 10/22/57 9/24/58 49.74 38.98 1.8 -21.6R 13* .138
8/03/59 10/25/60 1/27/61 60.71 52.30 22.1 -13.9R 214 .103
12/12/61 6/26/62 9/03/63 72.64 52.32 19.7 -28.0 221 .089
5/13/65 6/28/65 9/27/65 90.27 81.60 24.3 - 9.6 246 .099
2/09/66 10/07/66 5/04/67 94.06 73.20 4.2 -22.2 94 .045
9/25/67 3/05/68 5/01/68 97.59 87.72 3.8 -10.1 99 .038
11/29/68 5/26/70 3/06/72 108.37 69.29 11.0 -36.1R 125 .088
1/11/73 10/03/74 7/17/80 120.24 62.28 11.0 -48.2R 214 .051
11/28/80 8/12/82 11/03/82 140.52 102.52 16.9 -27.1R 93* .182
10/10/83 7/24/84 1/21/85 172.65 147.82 22.9 -14.4 236 .097
9/04/86 9/29/86 12/02/86 253.83 229.91 47.0 - 9.4 409 .115
8/25/87 12/04/87 7/26/89 336.77 223.92 32.7 -33.5 184* .178
10/09/89 1/30/90 5/29/90 359.80 322.98 6.8 -10.2 52* .131
7/16/90 10/11/90 2/13/91 368.95 295.46 2.5 -19.9R 33 .076
9/20/95p 586.77 59.0 1162 .051
(8)n. Number of trading days from the preceding recovery to a new historic high date in column (3) to the peak date in column (1).
(9)n. The peak to peak gain in column (6) divided by the number of trading days without a cumulative decline of 9 percent or more in column (8)
R identifies cumulative declines of nine percent or more which were associated with economic recessions.
*Durations of new high bull markets that are associated with peak to peak gains per trading day in column (9) amounting to .120 percentage point or more. These bull markets have an average duration of only 125 trading days which is only about half the average duration for the bull markets with peak to peak gains per day that are less than .120 percentage points.
p equals a preliminary peak which may be exceeded before the next cumulative new high decline amounting to nine percent or more.
Return Years Financial Returns
---------------- ----------------- High-Low
High Low High Low Spread
(1) (2) (3)n
1933T 1931D 53.0 -41.7 94.7
1945T 1941W 35.7 -11.2 46.9
1954T 1957P 51.2 -10.4 61.6
1961T 1966W 26.6 -10.0 36.6
1975T 1974D 36.9 -26.0 62.9
1980T 1981P 31.5 - 4.8 36.3
1991T 1990P 30.0 - 3.1 33.1
(3)n. The high return for the decade in column (1) minus the low return in column (2).
D identifies recessionary years containing neither an NBER peak or trough. These have been the worst years, on the average, to have owned common stock since the crash of 1929.
P identifies years containing a recessionary peak in business activity designated by the National Bureau of Economic Research (NBER).
T identifies years containing a recessionary trough in business activity designated by NBER. All of the decade high returns for the S&P index have occurred during years containing a recessionary trough.
W identifies bad years to have owned common stock in the midst of a major war.
Number of Growth Rates for Real GDP Number of Financial Returns
Decade ----------------------------------- ---------------------------
Negative Zero-4.1% Over 4.1% Negative Zero-9.9% 10% and
Over
(1) (2) (3) (4) (5) (6)
1930s 5 0 5 6 0 4
1940s 3 2 5 3 2 5
1950s 2 3 5 2 1 6
1960s 0 4 6 3 1 6
1970s 2 3 5 3 2 5
1980s 2 7 1 1 2 7
1990s 1 4 0 1 3 1
Payroll Employment Percentage Changes
Date of ------------------------ ------------------------- Share of
Employ. Total Goods Service Total Goods Service Total Emp.
Peaks & Indust. Indust. Employ. Indust. Indust. Goods Ind.
Troughs (Thousands of Employees) (Percent)
Sep. 48 45,162 18,916 26,246 41.9
Oct. 49 42,805 16,777 26,028 -5.2 -11.3 - .8
June 53 50,389 21,279 29,110 42.2
Aug. 54 48,643 19,419 29,224 -3.5 - 8.7 .4
Mar. 57 53,062 21,271 31,791 40.1
May 58 50,770 19,159 31,611 -4.3 - 9.9 - .6
Apr. 60 54,634 20,716 33,918 37.9
Feb. 61 53,380 19,558 33,822 -2.3 - 5.6 - .3
Mar. 70 71,347 24,202 47,145 33.9
Nov. 70 70,296 22,707 47,589 -1.5 - 6.2 .9
Oct. 74 78,569 24,582 53,987 31.3
Apr. 75 76,298 22,335 53,963 -2.9 - 9.1 - .0
Mar. 80 90,995 26,307 64,688 28.9
July 80 89,676 25,042 64,634 -1.4 - 4.8 - .1
July 81 91,410 25,630 65,780 28.0
Nov. 82 88,649 22,964 65,685 -3.0 -10.4 - .1
June 90 109,911 25,034 84,877 22.8
Feb. 92 108,067 23,250 84,817 -1.7 - 7.1 - .1
Mar. 95 115,830 23,992 91,838 20.7
Source of basic data: The Survey of Current Business, October 1994 and April 1995, BCI series 40 and 41.
Year US Canada France Germany Italy Japan UK Spread
(1) (2) (3) (4) (5) (6) (7) (8)n
1954T 40.7 32.1 87.4* 63.5* 29.6 -17.7 39.3 105.1
1955 30.0 22.7 - 4.9 22.7 21.6 21.2 2.4 34.9
1956 2.2 5.3* 12.2* - 8.0 - 1.2 35.3* -11.7 47.0
1957 -13.1 -23.5 27.4* 8.7* 5.9* -14.9 - 5.0* 50.9
1958T 32.6 26.8 -18.5 68.1* 15.8 35.2 33.9* 86.6
1959 10.3 1.3 64.0* 76.4* 62.0* 44.4* 44.2* 75.1
1960 - 3.7 - 1.8* 4.4* 53.7* 24.6* 25.7* - 4.7 58.4
1961T 26.2 28.6* 18.1 -11.7 8.7 -12.3 - 2.5 40.9
1962 -12.7 -10.2* - 3.1* -23.2 -12.4* 6.9* 2.5* 30.1
1963 18.5 11.7 -15.8 12.2 -13.6 - 6.5 19.7* 35.5
1964 13.1 21.4* - 5.6 3.6 -27.5 - 4.6 -19.3 48.9
1965 9.3 3.3 - 8.6 -12.4 14.5* 12.1* 4.6 26.9
1966 -11.3 -10.4* -10.9* - 9.0* 9.2* 6.6* -10.9* 17.5
1967 17.2 13.9 - .8 30.6* - 6.5 - 6.2 31.8* 38.3
1968 11.7 18.2* 5.7 11.9* - 1.4 30.5* 39.8* 41.2
1969 -14.4 - 4.1* 27.2* 15.2* 16.8* 30.0* -15.9 45.9
1970T - 1.1 - 7.0 - 1.2 -28.1 -17.9 -12.8 - 8.7 27.0
1971 10.1 4.5 - 8.6 3.9 -19.0 28.0* 37.2* 56.2
1972 18.4 23.9* 21.0* 16.8 11.6 97.7* 15.1 86.1
1973 -19.3 - 2.7* 1.7* -19.8 12.9* -19.2* -33.9 46.8
1974 -29.2 -29.3 -29.7 - 4.4* -25.0* - 7.2* -53.7 49.3
1975T 32.2 12.9 30.5 27.1 - 8.6 12.4 139.1* 147.7
1976 17.9 6.1 -17.4 - 8.9 -12.4 15.2 - 5.2 35.3
1977 -10.3 4.7* - 8.7* 7.9* -25.0 - .6* 50.5* 75.5
1978 2.4 23.6* 49.2* 6.7* 38.0* 23.5* 6.8* 46.8
1979 12.2 38.4* 19.2* -13.4 23.0* 1.5 1.9 51.8
1980T 23.9 25.1* 10.3 - 2.5 114.9* 8.2 23.6 117.4
1981 - 7.2 -13.9 -17.4 .6* 25.7* 15.6* 5.8* 43.1
1982T 12.5 .2 - .5 6.8 -13.2 2.7 28.7* 41.9
1983 17.9 30.3* 92.6* 43.3* 10.8 21.0* 18.3* 81.8
1984 .1 - 6.0 - .2 4.5* 14.7* 26.3* 27.5* 33.5
1985 26.1 20.9 25.1 57.4* 104.4* 15.9 16.9 88.5
1986 19.9 5.7 57.0* 12.6 63.3* 50.5* 20.9* 57.6
1987 - 3.1 3.1* -24.2 -32.4 -27.7 17.7* 4.2* 50.1
1988 14.8 7.3 53.9* 24.8* 16.5* 26.0* 6.7 47.2
1989 26.1 17.1 21.8 25.2 15.9 24.1 28.8* 12.9
1990 - 5.7 -18.0 -20.8 -12.6 -21.5 -39.0 -10.6 33.3
1991T 18.2 7.9 12.5 .5 - 6.9 - 2.9 13.5 25.1
1992 12.1 - 4.6 7.0 -10.6 -13.4 -22.0 13.4* 35.4
1993 7.0 29.0* 28.2* 34.9* 37.4* 9.2* 17.6* 30.4
1994 - 2.3 - 2.7 -12.7 - .4* 4.7* 5.8* - 6.2 18.5
(8)n. The highest percentage change minus the lowest percentage change for the seven industrialized countries.
T identifies years containing a recessionary trough in the United States.
*Cases where another country's stock index outperformed the US stock index.
Source of basic data: BCI series 19 and 742-48.
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