Secular Bear Market Table

SECULAR BULL & BEAR MARKETS PROFILE (#) Total Years

Market Cycle To From 1901 1921 1929 1933 1937 1942 1966 1982 2000

20 8 4 4 5 24 16 18

1920 1928 1932 1936 1941 1965 1981 1999 ????

P/E Ratio Inflation Beg. End Beg. End

Market BEAR BULL BEAR BULL BEAR BULL BEAR BULL BEAR

23 5 28 11 18 9 21 7 42

(#) Positive Years

(#) Negative Years

(%) Positive Years

(%) Negative Years

Max Pos. Yrs In Row

Max Neg. Yrs In Row

Avg Gain In Pos. Years

Avg Loss In Neg. Years

Change Begin To End

9 7 0 4 1 18 9 16 4

11 1 4 0 4 6 7 2 5

45% 88% 0% 100% 20% 75% 56% 89% 44%

55% 13% 100% 0% 80% 25% 44% 11% 56%

2 5 0 4 1 4 3 9 2

3 1 4 0 3 1 2 1 3

30% 24% n/a 34% 28% 16% 13% 18% 13%

-17% -3% -32% n/a -16% -8% -15% -4% -13%

2% 317% -80% 200% -38% 774% -10% 1214% -24%

42% 83%

58% 17%

2.1 5.8

2.7 0.9

21% 19%

-18% -5%

-14% 810%

5 -2% 16% 22 -11% -2% 8 0% -10% 19 -5% 1% 12 4% 5% 23 11% 2% 8 3% 10% 42 6% 2% 3%

WEIGHTED AVERAGE BEAR (excluding 2000) WEIGHTED AVERAGE BULL

Notes: The index and returns reflect the Dow Jones Industrial Average at year-end from Dow Jones & Company. The P/E ratio is based upon the S&P 500 as developed and presented by Robert Shiller (Yale; Irrational Exuberance). Bull & Bear Market classifications are based upon Crestmont's assessment of cycles using peak and trough P/E ratios, inflation trends, and other analysis. The presentation does not include dividends, taxes, inflation adjustments, or transaction costs.

RETURN PATTERN (Red = down year; Green = up year; #% = annual change in the index; starting and ending DJIA index is presented on the ends of the rows) 1901–1920: BEAR

71

P/E Ratio CPI: Inflation 1921–1928: BULL

72

P/E Ratio CPI: Inflation 1929–1932: BEAR

300

P/E Ratio CPI: Inflation 1933–1936: BULL

60

P/E Ratio CPI: Inflation 1937–1941: BEAR

180

P/E Ratio CPI: Inflation 1942–1965: BULL

111

P/E Ratio CPI: Inflation 1966–1981: BEAR

969

P/E Ratio CPI: Inflation

8% -10% -31% 82% -4% -22% 11% 30% -33%

22 6%

14 7%

875

16 0%

19 1%

19 3%

13 6%

13 -4% 4%

0%

29% 48%

5 -11%

12 1%

16 -2%

8 -6%

8 2%

8 0%

10 2%

15 8%

14 4%

14 -8% 8%

12 3%

11 1%

12 1%

12 8%

9 17%

6 18%

7 15%

72

5 16%

300

22 -2%

-17% -34% -53% -23% 28 0%

22 -2%

15 -9%

67%

4%

39% 25%

11 -5%

12 3%

13 2%

60

8 -10%

180

19 1%

-33% 28% -3% -13% -15% 19 4%

14 -2%

8%

14% 12% 27% -8% 11 6%

-19% 15% 22 3%

16 -1%

15 1%

10 3%

111

12 5%

2%

-2% 13% 18% 14%

8%

-4% 44% 21%

2% -13% 34% 16% -9% 19% -11% 17% 15% 11%

14 8%

11 14%

11 8%

13 2%

12 1%

18 1%

4% -15% 5%

6%

22 4%

17 4%

11 2%

13 2%

19 5%

15 6%

20% 20% -4% 28% 23% 7 6%

11497

18 1%

13% 22% -3% 26% 30%

21 3%

P/E Ratio CPI: Inflation 2000–????: BEAR

0% -24% 42% 38% -2% -38% 47% 15% -18% 0%

23 -2% 2%

9 11%

P/E Ratio CPI: Inflation 1982–1999: BULL

-9%

2%

18 3%

16 6%

11 11%

10 9%

12% 27% -4% 20%

-6% -7% -17% 25%

3%

-1% 16%

6% -34%

42 3%

26 3%

26 3%

27 3%

24 2%

12 8%

14 1%

15% -17% -28% 38% 18% -17% -3%

16 4%

26 2%

11 4%

11 1%

13 2%

32 3%

9 4%

10 -1%

14 4%

26 3%

17 5%

17 5%

18 4%

18 0%

16 3%

15 3%

18 1%

4%

15% -9%

12 6%

10 7%

9 8%

9 11%

9 13%

4%

14%

2%

33% 26% 23% 16% 25%

20 3%

21 3%

21 3%

23 3%

26 3%

17 2%

21 1%

19 1%

20 1%

23 1%

969

23 2%

875

9 10%

31 2%

36 2%

42 2%

21 4%

Copyright 2003-2009, Crestmont Research (www.CrestmontResearch.com)

11497