Donald H. Young
  DonaldHYoung.com      
Updates Page 2

(2) The return and risk data in Chapter 2 in the book are as of 2006. All of the Figures in Chapter 2 (Figures 2-1 through 2-5) have now been updated based on market data through 2010, and they are shown below. Under each Figure, I provide a commentary which compares the Figures based on data through 2006 with the Figures based on data through 2010.
 
Most of the data have not changed very much, which is not surprising given the long periods involved.

                                         Figure 2-1
                     Returns and Risks for Bonds and Stocks
                                      1926-2010 (%)
------------------------------------------------------------------------------
                          Compound               One-Year
                            Annual                     Return Range
                            Return               2/3 of the Time
--------------------------------------------------------
 
Bonds                            5.2                            -5 to +15
 
Stocks                     9.7                    -11 to +30

The return data are slightly lower than those in the book, but the risk data are almost the same.The comments about Figure  2-1 in the book are still applicable.
 
 

                                      Figure 2-2
                               Rolling 5-Year Data
                                   1930-2010 (%)
------------------------------------------------------------------------------
                            Five-Year
                             Median                        Return Range
                             Return                         2/3 of the Time
-------------------------------------------------------------------------------
 
      Bonds                5.5                       +1 to +10
      Stocks                 10.1                       +1 to +19

The return and risk data are also almost exactly the same as those in the book.  The comments about Figure  2-2 in the book are still applicable.
 
 

                             Figure 2-3
      Compound Annual Returns by Decade (%)
                            1920-2010   
----------------------------------------------------------------------
   Decade                     Bonds               Stocks
----------------------------------------------------------------------
1920-1929                5.0                   19.2
1930-1939                4.9                    -0.1
1940-1949                3.2                     9.2
1950-1959               -0.1                   19.4
1960-1969                1.4                     7.8
1970-1979                5.5                     5.9
1980-1989                  12.6                   17.5
1990-1999                8.8                   18.2
2000-2009                6.2                    -1.0
 
All the data before the 2000-2009 period are the same as they are in the book. The data through 2006 in the book have been updated to make a full decade through 2009. Because of the significant decline in the stock market from 2007-2009, the performance for stocks for this decade has declined from 1.1% in the book (through 2006) to -1.0% (through 2009).
 
As you can see, the performance for this decade is the worst of any decade in history. It is important to note, however, that this worst decade had a compound return which was only a negative 1.0%. Furthermore, this decade had two significant equity market declines, which is historically unusual.
 
Note that the outperformance of bonds compared to stocks during the 2000-2009 period is the best for any of the decades shown. 

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