Bull Market Mystery

April 04, 2012

By W. Andrew Unkefer

Today’s economic environment is an excellent example of the influence that market makers have on people’s decisions. Countless American’s are being lured by the potential of higher returns but not always being made fully aware of the risks associated with their decisions.

It is interesting how these various organizations and individuals like to measure market performance as if each measurement period stands on its own and is not influenced in any way by the past or by the future. For example, you might hear something like, “The S&P 500 is celebrating a three-year bull market!” You will likely also see many mutual funds touting their returns over the last three years.

Is the three-year bull market real?

Here are the facts. The S&P 500 bottomed out most recently on March 2, 2009, closing at 683.38. Approximately three years later (as of March 26, 2012) the S&P closed at 1,416.51. That equals an attractive annual growth rate of 27.50 percent. Sounds great doesn’t it?  But is that the whole story? Are these gains locked in and protected against loss?

What about long-term performance?

A quick examination of the past reveals a completely different story. If you go back over the last 12 years, investors saw an incredibly different picture. The fact is that on March 20, 2000, the S&P 500 index closed at 1527.46. During that time period, the market has experienced high levels of volatility. When you use March 20, 2000, as an original starting point, you will find that the S&P 500 index has spent nearly all of its time below the March 20, 2000 value of 1527.46. Just small handful of days exceeded this value. As of March 26, 2012, the S&P 500 is still 7.26 percent below its year 2000 peak.

Over the last 12 years, the market has been like a roller coaster – where you begin the ride right at the top. As you ride, the coaster takes you through twists, turns, dips and peaks, but it has never really gotten you back to where you started.

The truth is that the S&P has spent about 12 years below its March 20, 2000 value. Investors needing periodic or systematic access to their money during that period would have done so at a loss. The three-year bull market is actually a phantom.

More than 80 percent of all qualified money is in the market. IRA owners age 70½ and older are required to make minimum distributions, according to the US Census Bureau. That means that all IRA owners who were in the market watched their retirement account dwindle through market losses and through required distributions. This depletes their retirement account even faster.

Are you wondering how much the market needs to grow to equal an attractive return over the last 12 years? Here’s a hypothetical study: let’s give the S&P 500 three more years to grow and then evaluate if the returns can be reasonably achieved. By adding three years to the past 12, we can get a 15-year hypothetical performance.


Over the next 36 months…

If the market increases by:

The effective 12-year rate of return would be:


















The bottom line is that the next 36 months need to be absolutely phenomenal just to provide investors with mildly competitive returns that they could have captured in a variety of risk free opportunities. Have investors been fooled again? We believe so.


Investment promoters typically emphasize diversification as the answer to harnessing market risk. The S&P 500 is widely diversified. These 500 companies comprise more than 70 percent of the market’s capitalization, according to Standard & Poor’s. And, according to analyst firm Morningstar, less than 25 percent of mutual funds even compete with returns of the S&P 500. Diversification reduces the risk of one stock tanking, but it does not protect against broad market losses that affect every investor.

A Fixed Annuity may be the answer.

Savers would have far out performed investors over the last 12 years by simply playing it safe. Today’s fixed annuities and fixed indexed annuities allow people to protect their principal, protect their past interest credits and even take systematic income on a monthly basis – with no fear of ever running out of their money!

W. Andrew Unkefer is the president and CEO of Unkefer & Associates, Inc., a national annuity and life insurance marketing firm. The company’s goal is to be the No.1 resource for independent agents in their life and annuity business. He may be reached at 800.523.5851 or [email protected].

© Entire contents copyright 2012 by InsuranceNewsNet.com, Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.



4/25/2012 8:23:06 PM - Tucson

He's just a part of the entire DC crowd of felons. The "law" doesn't apply to CEO apparently.


4/23/2012 11:41:53 PM - Scottsdale

Should people really believe this accessory to a felon? Doesn't Sherman work in his office? The felonious family business really helped capitalize an almost semi-ligitimate insurance business? Con men really know their markets and marks! Ethics and integrity shouldn't be just a mantra on your website, follow the money and the links: http://mlmnewssite.com/top-xango-distributor-sherman-unkefer-facing-multi-million-charges/ http://blogs.phoenixnewtimes.com/valleyfever/2010/11/sherman_unkef

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