Capital Markets Year in Review

Chart of the Week for December 30, 2005-January 5, 2006

As 2005 draws to a close, it’s a good time to reflect about how far we've come and take a look at what’s happened in the markets this year. The chart shows return information as of earlier this week. It was a year of moderate performance and single-digit returns for domestic markets. Stocks surpassed bond returns and large-cap beat small-cap stocks. Rising interest rates took a toll on bond prices in 2005, pushing them to the lowest levels in over five years. International stocks were the show-stoppers this year, boosted by stellar returns in Asia.

Seeing the return differences between categories reminds us to diversify in order to maintain a balanced portfolio as we head into 2006. Happy New Year!

(These categories are represented by the following indices: Bonds - Lehman Aggregate Bond Index, Large-Cap - Russell 1000 Index, All-Cap - Russell 3000 Index, Small-Cap - Russell 2000 Index, International - MSCI EAFE.)

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