Taking Stock of Company Stock—and Its Risks—in a 401(k) Plan

While a potentially attractive option because it offers participants a convenient and tax-efficient opportunity to invest in their employer, company stock comes with significant fiduciary and investment risks, especially if the allocation to company stock becomes too concentrated. 

How to Hit Your Stride as a Small-Business Retirement Plan Advisor

Small-business retirement plans are in demand and pose an excellent opportunity for getting ahead. Through your relationship with plan sponsors, you have the chance to provide much-needed support to participants—and ultimately give a boost to your wealth management business.

Vanguard’s Approach to Target-Date Fund Rebalancing

The TDF rebalancing policies Vanguard has put in place help us increase investors’ chances of achieving retirement success. You’ll see how through this overview of our methodology and rationale for our rebalancing strategy. You’ll also learn about our approach to benchmark selection, construction, and implementation.

Vanguard economic and market outlook for 2024: A return to sound money

Read our report about how today’s high-rate environment—with interest rates finally outpacing inflation, as they likely will for several years—may be the best development for savers and investors in two decades. 

Vanguard economic and market outlook for 2024: Global summary

Read more for Vanguard’s thoughts regarding the future of the global economy.

How America Saves 2023: Your plan is the key to retirement success

Jeff Clark, the lead author of How America Saves 2023, and Fu Tan, a senior investment strategist and one of the lead authors of the upcoming report The Vanguard Retirement Outlook, discussed Americans’ retirement readiness. They shared key insights from both pioneering studies that you can use to help your participants move closer to fulfilling their retirement goals. Watch the replay here. 

An unusual time for money market and stable value funds

The Federal Reserve has been raising interest rates at the fastest pace in history to combat the highest inflation seen in decades. Since the beginning of 2022, the federal reserve increased the Federal Funds from near zero to between 5–5.25% (as of May 2023). Learn more about how the impact of inflation and rising rates has triggered volatility in the markets.

Tools to Help Your Participants Shrink High-Interest Debt

Volatile markets, inflation, and rising interest rates are enough to make even the most stoic investor feel a little stressed when it comes to protecting their money. Learn how to help your participants tune out the noise and turn their money from a source of stress to a source of some peace of mind.

Vanguard CIO Addresses a Dismal Market

With inflation still high, the Federal Reserve continuing to ratchet up interest rates, and both stocks and bonds well into negative territory so far this year, is there any respite or sanctuary? We asked Vanguard Chief Investment Officer Greg Davis to give his perspective on the markets. Read more.

Getting Inside the Fed’s Head

The task currently facing the Federal Reserve is daunting: Getting inflation back to target without causing the economy to stall. Whether it succeeds will likely hinge on the evolution of three key policy drivers and the Fed’s response to them: inflation expectations, energy prices, and spare capacity in the economy. Read Vanguard’s perspectives here.  

Vanguard Downgrades Global Economic Growth

In the rapidly changing environment that has characterized 2022 so far, we have downgraded our forecasts for GDP growth for the United States and China and revised our views on inflation and monetary policy for the euro area. But we believe these economies will likely avoid a recession this year, and our forecast for Federal Reserve policy is unchanged. Learn more here.

How to withstand challenging markets—again

Events in Ukraine are creating a human toll and immeasurable suffering. Economic responses, including sanctions, have led to market turmoil and anxiety about what may come next. 

When it comes to investing, however, it's best to resist the urge to act. It's not easy, but in a situation such as this, we suggest you steer yourself for what may come and try to keep emotions out of investing decisions. You can also visit our market volatility library to read more insights from Vanguard experts regarding the crisis in Ukraine.

Despite the uncertainty that has gripped the markets and the likelihood of continued volatility, we'll one day view today's events in retrospect. Vanguard has studied more than two dozen geopolitical events, some of which roiled the markets, and that gives us hope.

Geopolitical sell-offs have often been short-lived
Notes: Returns are based on the Dow Jones Industrial Average through 1963 and the Standard & Poor's 500 Index thereafter. All returns are price returns. Not shown, but included in the averages, are returns after the following events: the Suez Crisis (1956), construction of the Berlin Wall (1961), assassination of President Kennedy (1963), authorization of military operations in Vietnam (1964), Israeli-Arab Six-Day War (1967), Israeli-Arab War/oil embargo (1973), shah of Iran's exile (1979), U.S. invasion of Grenada (1983), U.S. bombing of Libya (1986), First Gulf War (1990), President Clinton impeachment proceedings (1998), Kosovo bombings (1999), September 11 attacks (2001), multiforce intervention in Libya (2011), U.S. anti-ISIS intervention in Syria (2014), and President Trump impeachment proceedings (2019 and 2021).
Sources: Vanguard calculations, as of December 31, 2021, using data from Refinitiv.

As the illustration shows, it hasn't taken long for equity markets to recover from initial sell-offs in response to geopolitical events. Yet we wouldn't have predicted such quick recoveries near the onset of any of these historical sell-offs. Nor do we predict one now as markets digest fast-moving developments related to Ukraine. Rather, we want investors to remain aware of the risks.

A new challenge for markets and policymakers
Inflation, already accelerating to multidecade highs, may have impetus to climb further still, beyond Vanguard's previous expectations, as the supply of goods from the region is constricted. Higher energy prices coupled with a potentially more challenging business environment owing to the conflict could weigh on economic growth and corporate profits. As a result, equity markets may respond poorly in the short run.

The Vanguard Economic and Market Outlook for 2022 discussed the challenges we expected for policymakers who aimed to promote still-fragile COVID-19 economic recoveries and stifle worrisome inflation. The uncertain events in Ukraine make the policy calculus, especially for interest-rate-setting central banks, more problematic than it had been.

Invariably, the markets will test investors' resolve yet again. Such environments may turn investors toward unhealthy behaviors such as abandoning well-considered asset allocations and trying to time the market, somehow picking not only the right time to exit, but also the right time to get back in.

Don't do it. Instead, maintain discipline and focus on what you can control, among the tenets of Vanguard's Principles for Investing Success. They're what keep investors, in the long run, still standing.

Note: All investing is subject to risk, including the possible loss of the money you invest.

Vanguard economic and market outlook for 2022: Global summary

The global economy in 2022: Striking a better balance

Our outlook for 2021 focused on the impact of COVID-19 health outcomes on economic and financial conditions. Our view was that economic growth would prove unusually strong, with the prospects for an "inflation scare" as growth picked up. As we come to the end of 2021, parts of the economy and markets are out of balance. Labor demand exceeds supply, financial conditions are exceptionally strong even when compared to improved fundamentals, and policy accommodation remains extraordinary.

Although health outcomes will remain important in 2022, the outlook for macroeconomic policy will be more crucial as support and stimulus packages enacted to combat the pandemic-driven downturn are gradually removed into 2022. The removal of policy support poses a new challenge for policymakers and a new risk to financial markets.

The global economic recovery is likely to continue in 2022, although we expect the low-hanging fruit of rebounding activity to give way to slower growth whether supply-chain challenges ease or not. In both the United States and the euro area, we expect growth to normalize lower to 4%. In the U.K., we expect growth of about 5.5%, and in China we expect growth to fall to about 5% given the real estate slowdown.

More importantly, labor markets will continue to tighten in 2022 given robust labor demand, even as growth decelerates. We anticipate several major economies, led by the U.S., to quickly approach full employment even with a modest pickup in labor force participation. Wage growth should remain robust, and wage inflation is likely to become more influential than headline inflation for the direction of interest rates in 2022.

Global inflation: Lower but stickier

Inflation has continued to trend higher across most economies, driven by a combination of higher demand as pandemic restrictions were lifted and lower supply from global labor and input shortages. Although a return to 1970s-style inflation is not in the cards, we anticipate that supply/demand frictions will persist well into 2022 and keep inflation elevated across developed and emerging markets. That said, it is highly likely that inflation rates at the end of 2022 will be lower than at the beginning of the year given the unusual run-up in certain goods prices.

Although inflation should cool in 2022, its composition should be stickier. More persistent wage-based inflation should remain elevated given our employment outlook and will be the critical determinant in central banks' adjustment of policy.

Policy takes center stage: The risk of a misstep increases

The global policy response to COVID-19 was impressive and effective. Moving into 2022, how will policymakers navigate an exit from exceptionally accommodative policy? The bounds of appropriate policy expanded during the pandemic, but it's possible that not all these policies will be unwound as conditions normalize. On the fiscal side, government officials may need to trade off between higher spending—due to pandemic-driven policies—and more balanced budgets to ensure debt sustainability.

Central bankers will have to strike a delicate balance between keeping a lid on inflation expectations, given negative supply-side shocks, and supporting a return to pre-COVID employment levels. In the United States, that balance should involve the Federal Reserve raising interest rates in 2022 to ensure that elevated wage inflation does not translate into more permanent core inflation. At present, we see the negative risks of too-easy policy accommodation outweighing the risks of raising short-term rates. Given conditions in the labor and financial markets, some are likely underestimating how high the Fed may ultimately need to raise rates this cycle.

The bond market: Rising rates won't upend markets

Despite modest increases during 2021, government bond yields remain below pre-COVID levels. The prospect of rising inflation and policy normalization means that the short-term policy rates targeted by the Fed, the European Central Bank, and other developed-market policymakers are likely to rise over the coming years. Credit spreads remain generally very tight. In our outlook, rising rates are unlikely to produce negative total returns, given our inflation outlook and given the secular forces that should keep long-term rates low.

Global equities: A decade unlike the last

A backdrop of low bond yields, reduced policy support, and stretched valuations in some markets offers a challenging environment despite solid fundamentals. Our Vanguard Capital Markets Model® fair-value stock projections, which explicitly incorporate such varied effects, continue to reveal a global equity market that is drifting close to overvalued territory, primarily because of U.S. stock prices. Our outlook calls not for a lost decade for U.S. stocks, as some fear, but for a lower-return one.

Specifically, we are projecting the lowest 10-year annualized return projections for global equities since the early 2000s. We expect the lowest ones in the U.S. (2.3%–4.3% per year), with more attractive expected returns for non-U.S. developed markets (5.3%–7.3%) and, to a lesser degree, emerging markets (4.2%–6.2%). The outlook for the global equity risk premium is still positive but lower than last year's, with total returns expected in the range of 2 to 4 percentage points over bond returns.

For U.S. investors, this modest return outlook belies opportunities for those investing broadly outside their home market. Recent outperformance has only strengthened our conviction in non-U.S. equities, which have more attractive valuations than U.S. equities. Although emerging-market equities are above our estimate of fair value, we still expect higher returns than the U.S. and diversification benefits for investors. Within U.S. markets, we think value stocks are still more attractive than growth stocks, despite value's outperformance over the last 12 months.

Notes:

• IMPORTANT: The projections and other information generated by the Vanguard Capital Markets Model® (VCMM) regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from VCMM are derived from 10,000 simulations for each modeled asset class. Simulations as of September 30, 2021. Results from the model may vary with each use and over time.
• The VCMM projections are based on a statistical analysis of historical data. Future returns may behave differently from the historical patterns captured in the VCMM. More important, the VCMM may be underestimating extreme negative scenarios unobserved in the historical period on which the model estimation is based.
• The Vanguard Capital Markets Model® is a proprietary financial simulation tool developed and maintained by Vanguard's primary investment research and advice teams. The model forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include U.S. and international equity markets, several maturities of the U.S. Treasury and corporate fixed income markets, international fixed income markets, U.S. money markets, commodities, and certain alternative investment strategies. The theoretical and empirical foundation for the Vanguard Capital Markets Model is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk (beta). At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over several time horizons. Forecasts are obtained by computing measures of central tendency in these simulations. Results produced by the tool will vary with each use and over time.
• All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future returns. Diversification does not ensure a profit or protect against a loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
• Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.
• Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.

© 2021 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor.

 

2022 Regulatory Limits Poster and Compliance Calendar

Keep up with key deadlines and deferral limits with our 2022 regulatory limits poster and compliance calendar.

Review How America Saves 2021 Small business edition

Vanguard Retirement Plan Access™ (VRPA) is pleased to present How America Saves 2021 Small Business Edition. This new research provides valuable insights into small-business defined contribution (DC) plans and participant behaviors over the course of 2020. We hope it will serve as a useful reference tool to encourage engagement and drive outcomes for your employees.

Gain insight from this new report

Vanguard TDFs: Setting our sights on financial well-being

Today, participants are looking for more from their retirement plans. Saving for retirement is still vital, but they're looking to their employers to help them achieve financial well-being.
We at Vanguard believe that financial wellness programs should address an individual's unique needs and circumstances as they journey to and through retirement. This is especially critical when you consider that financial wellness programs can improve:

• Worker satisfaction.

• Employee productivity.

• Recruiting and retention.

• Stress levels in the workplace.¹

As more and more plan sponsors and participants recognize the importance of financial well-being, we're doing our part to help with our target-date funds (TDFs). In a recent webcast, Vanguard Principal and Head of Institutional Investor Services Matt Brancato shared how TDFs can help participants achieve financial well-being.

In the second video below, Matt joins Amber Czonstka, principal and head of Institutional Investor Advice and Client Experience, to discuss the evolution of Vanguard's TDF strategy and three key changes we're making in 2021.

Video transcript: The role of target-date funds in financial well-being 

Video transcript: The continued evolution of our target-date funds 

Watch the full target-date fund webcast.

¹ Financial Wellbeing Employer Survey. Employee Benefit Research Institute, 2020.

Notes:

• All investing is subject to risk, including the possible loss of the money you invest.
• Diversification does not ensure a profit or protect against a loss.
• Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.

The key to achieving COVID-19 herd immunity

The end of 2020 brought a surge of hope about humanity’s ability to assert control over the COVID-19 pandemic. The first vaccines to emerge from clinical trials proved more effective than even the most optimistic assessments, raising the confidence of public health experts and investors alike, as I wrote late last year.

Now, even as infections and hospitalizations remain elevated and new disease variants appear to spread more quickly, we remain confident that the developed world will begin to show meaningful progress against the pandemic in the months ahead.

The essential variable? Vaccine distribution. Despite a slow start, the pace of vaccinations in the United States now exceeds 1 million per day.¹ We’re early in the rollout, and we believe that initial distribution bottlenecks—attributable in no small part to stockpiling scarce supply to ensure second doses—are surmountable. A change in strategy that prioritizes first doses and increased vaccine production should ensure that the pace of vaccinations accelerates.

The path to herd immunity depends on the pace of vaccinations

Notes: This analysis, as of January 25, 2021, discounts people who achieve immunity through infection. The gray buffers around the vaccination trend lines reflect the impossibility of precisely predicting when herd immunity may be achieved.

Source: Vanguard.

As a result, our analysis suggests, the United States can approach herd immunity in the second half of the year, consistent with our view in the Vanguard Economic and Market Outlook for 2021. As our forecast further notes, the timing of when herd immunity is achieved relates directly to our outlook for the global economy. The path of economic recovery hinges critically on health outcomes; we expect to see business and social activity normalize as we approach herd immunity.

The more quickly this occurs, the more quickly we’re likely to see unemployment rates trend downward, inflation move toward central bank targets, and output reach prepandemic levels.

Our analysis makes several assumptions, and we acknowledge that COVID-19 continues to present many unknowns. Our analysis assumes herd immunity thresholds—the percentage of a population that needs to be immune for herd immunity to kick in—of 66% and 80%. The 66% is a widely discussed COVID-19 threshold. If new strains in the United Kingdom, South Africa, and elsewhere prove more infectious, a more conservative threshold such as 80% may be more appropriate.

Finally, our analysis assumes that the vaccines now in use will prove effective against COVID-19 mutations. We know that the virus has mutated several times since its inception, yet vaccines based on its initial genetic sequencing have still proved remarkably effective.

The pandemic has upended the lives of nearly everyone. Despite some challenges still ahead, it’s gratifying to see increasingly clearly that a positive end is in sight.

I’d like to thank Vanguard economist Max Wieland for his invaluable contributions to this commentary.

¹ Source: Bloomberg COVID-19 Vaccine Tracker, showing an average of 1.25 million vaccinations per day over the week ended January 25, 2021.

Note:

• All investing is subject to risk, including the possible loss of the money you invest.

A pandemic, a vaccine, and a sea of ideas

The COVID-19 pandemic has been breathtaking in its ability to unleash profound effects on nearly everyone in the world. Equally breathtaking are the biomedical advances that have enabled 47 vaccine candidates to reach clinical evaluation in recent months.1

News on Monday, November 9, that one of those vaccine candidates appears to protect a vast majority from COVID-19 is raising the confidence of investors and public health experts alike. Vanguard earnestly hopes that further study confirms the good news and that a vaccine can be approved in the months ahead for broad use. It’s conceivable that more of the vaccine candidates can report similar efficacy in the weeks ahead.

We’re not surprised that this point was reached so quickly. The fields of genetics and biomedicine have been rife with innovative ideas in the last decade, and successes seem poised to have a cascading effect on productivity in the decade ahead. It’s a phenomenon we identified in The Idea Multiplier, our 2019 research that found that future productivity is fundamentally driven by the generation, dissemination, and further expansion of ideas.

Idea sharing: A significant force for productivity growth

Our research introduced what we termed the “Idea Multiplier,” a quantifying over time of academic-paper citations within and across industries and countries based on nearly two billion records. We found that idea sharing is a significant force for future productivity growth, and that a recent low-growth era was nearing an end.

The illustration shows how the Idea Multiplier as it’s related to genetics and biomedicine has recently accelerated at a pace similar to that of computers and telecommunications nearly four decades ago.

Today’s ideas in genetics and biomedicine are multiplying quickly

Notes: The Idea Multiplier is a proprietary metric that tracks the flow and growth of academic citations. It has been shown to be a leading indicator of productivity growth. For more information, see the Vanguard paper The Idea Multiplier: An Acceleration in Innovation Is Coming.

Source: Vanguard.

We won’t let our optimism about vaccine developments cause us to lose sight of the immense challenges ahead. The spread of COVID-19 is accelerating, too, with more than 50 million cases reported globally to date and more than 100,000 new daily infection cases in some countries, including the United States, recently.2 Production and distribution of a vaccine will take time.

Economies have recovered somewhat from the sharp falls they had suffered since the onset of the pandemic, but even a highly effective vaccine won’t lead to stronger economic growth overnight. Nevertheless, this crisis will eventually end, and this week brought a tangible signal of that, one we know was a decade of idea-sharing in the making.

1 Source: World Health Organization, November 3, 2020.

2 Source: Johns Hopkins Coronavirus Resource Center, November 9, 2020.

Notes:

• All investing is subject to risk, including the possible loss of the money you invest.

A Message from Vanguard

When clients come to our website, they are generally looking for perspectives on markets, insights into investment strategies, or details about a specific fund. Today we would like to share something about the people you invest with. As a company, we are appalled by the killings of Ahmaud Arbery, Breonna Taylor, and George Floyd, and we are troubled by the systemic issues that led to their unjust deaths.

Our team of 18,000 people from all walks of life comes together to serve you, our clients, and to support the communities in which we work. Our employees—our crew—live by a mission that includes taking a stand for investors and treating them fairly. The recent tragedies remind us that this commitment must extend beyond the realm of investing to shape how we support our colleagues and clients.

We condemn racism, xenophobia, and prejudice of any kind, all of which run counter to Vanguard's values. We stand united with the black community and lend our voice to the call for meaningful and systemic change.

We're on our own journey. As an employer, we strive every day to make Vanguard a more diverse and inclusive company—a place where each individual can reach their full potential. While we are not yet where we want to be, our crew are leading the way with open conversations about race, religion, gender, and sexuality. We are particularly grateful to our Crew Resource Groups, such as the Vanguard Black Professional Network, which have challenged us to do better and strengthened our sense of corporate community.

Our crew are passionate about improving the social disparities in our communities and give more than $10 million of their own money each year to drive change. Unfortunately, the recent social injustices underscore that there is so much more to be done. Vanguard will pledge an additional $5 million in immediate giving to support organizations committed to addressing injustice and racial disparities.

These actions are steps toward a future where our communities are safe and our crew have equal opportunities to excel and to do their best work on your behalf. We won't settle for less and are ready to work hard to make that future a reality. On June 9, Vanguard's U.S. offices will open for business 8 minutes and 46 seconds later than normal, as we observe a period of silence for George Floyd and reflect on what more we can do.

Coronavirus: What We Know and What We Don’t

By: Joseph Davis

As always, even absent global crises such as the coronavirus, we have to balance what we know with what we don’t know to properly assess what may happen next in the global economy and markets.

What we know, as I write, has upended the scales to the extent that the Standard & Poor’s 500 Index crept within 2 percentage points of a bear market less than three weeks after its all-time high. We know that:

• Equity markets that had priced in overly optimistic assumptions about economic growth, especially in China and the United States, have been vulnerable.

• The likely significant near-term economic impact of the coronavirus outbreak hasn’t played out yet.

• Saudi Arabia and Russia triggered an oil-market shock through their battle for market share by lowering prices and vowing to produce more oil even as a world worried about the virus will want less. The shock has pushed down asset prices and threatens an industry shakeout.

• Equity, fixed income, and now oil markets reflect the elevated level of uncertainty, and economic data expected in the weeks ahead likely will too.

What we don’t know
How the significant uncertainty about the coronavirus outbreak is resolved will help determine whether the global economy can avoid recession and the job losses and bankruptcies that typically accompany it. These two questions, whose answers we’ll know in the coming weeks, will matter:

Will new cases of the coronavirus outside of China start to crest by April? The timetable in China, where the World Health Organization reports the virus outbreak has peaked, would appear to signal a similar plateau before May outside of China. But only time will offer financial markets an understanding of whether containment efforts are succeeding and the end is in sight.

How will policymakers around the world respond? The U.S. Federal Reserve on March 3 cut the target for its key interest rate by 50 basis points, to a range of 1.00% to 1.25%, in an emergency move prompted by the virus outbreak. Historically, when the Fed has cut rates between scheduled policy-setting announcements, it has followed up at its next policy-setting meeting with a cut of equal or greater magnitude. Markets are currently pricing in an additional 75-basis-point cut ahead of the Fed’s next rate announcement, scheduled for March 18. (A basis point is one-hundredth of a percentage point.)

But more accommodative monetary policy, which is intended to spur lending and spending—and fiscal policy with similar goals, for that matter—can accomplish only so much. This is especially true as consumers worried about the coronavirus are less likely to be out and about. In the European Union and Japan, where key interest rates are below zero, monetary policy in particular offers little to stimulate economies.

Rather, to face a known, significant threat such as the coronavirus outbreak, a meaningful, globally coordinated fiscal response targeted at industries that need it most, such as health care, is required. The public and the economy will both need the proverbial “shot in the arm.” Decisive fiscal action can shorten the recovery period.

Effectively directed fiscal policy won’t be a panacea, but it can help counteract the virus and its spread and help minimize the human cost of the illness. And that’s more important than anything else.

This isn’t the global financial crisis
There’s one other thing that we do know, and it should give investors heart: The coronavirus is unlikely to be the second coming of the global financial crisis. That crisis was exacerbated by compromised underlying factors within the financial system that required a structural realignment of markets. Such a dynamic isn’t in play with the coronavirus, where recovery is more likely akin to a disaster-relief effort.

Investors, we’ve been here before. We’ve seen 13 corrections and 8 bear markets in global equities in the last 40 years. That’s about one every other year. And over that 40 years, global equities increased by a magnitude of 17 times.¹

So hang in there. This too shall pass.

¹Source: Vanguard analysis based on the MSCI World Index from January 1, 1980, through December 31, 1987, and the MSCI AC World Index thereafter, indexed to 100 as of December 31, 1979. Both indexes are denominated in U.S. dollars. Our count of corrections excludes those that turn into a bear market. We count corrections that occur after a bear market has recovered from its trough even if stock prices haven’t yet reached their previous peak.