Morningstar Magazine - October/November 2016 - 27

Dispatches Global Briefs TRENDS Downturns, Recoveries, and Expansions The U.S. stock market hit new highs over the summer. Will it run out of gas? A lot of things certainly seem to be giving investors jitters. But some context may be helpful. There have been eight market downturns since 1926, the most severe one being the Great Depression. More recently, two consecutive downturns with little to no expansion made for a "lost decade." But as we've n n n l o o o l n o is ample potential for future growth, even after recent run-ups. $ p Recessions (from NBER) p Downturn p Expansion p Recovery 10 146 Mo 697.7% TR 18.6% Annl 44 Mo 193.3% TR 34.1% Annl 67 Mo 85.9% TR 11.7% Annl 16 Mo 50.9% TR 36.2% Annl 35 Mo 21 Mo 24.0% TR 13.1% Annl 6 Mo -22.3% 151 Mo 9 Mo 21 Mo -42.6% 51 Mo 63.3% TR 12.2% Annl 18 Mo 21 Mo 19 Mo -29.3% 5 12 Mo 14.6% TR 14.6% Annl 10 Mo 6 Mo -21.8% 135 Mo 523.2% TR 17.7% Annl 134 Mo 434.5% TR 16.2% Annl 3 Mo -29.6% 25 Mo -44.7% 49 Mo 37 Mo 16 Mo -50.9% 34 Mo -83.4% 01/1926 01/1936 01/1946 01/1956 01/1966 01/1976 01/1986 01/1996 01/2006 0.1 Source: Morningstar. Created with S&P 500 month-end total return data. Be Mindful of Pricey Low-Volatility Stocks AMERICAS United States For the year-to-date period through July, the top-ranked equity exchange-traded fund n n n o iShares Edge MSCI Minimum Volatility USA USMV. The fund vacuumed up 6.7 billion in net new n o l n n months of the year. As more money has piled in to this fund and others like it, valuations have richened commensurately. At current levels, newcomers to the low-volatility party could be setting themselves up for disappointing future returns. E X H I B I T 1 plots trailing-12 on o n o USMV on the left-hand vertical axis. As shown, o n n ll o n USMV's late-2011 inception. More recently, they've spiked higher. On the right vertical axis is plotted the ratio of USMV's trailing 12-month P/E ratio to iShares Core S&P Total US Stock Market's ITOT trailing 12-month P/E. This is a simple o l l . n greater than 1 M is relatively richly valued global.morningstar.com/Morningstarmagazine 27 http://global.morningstar.com/Morningstarmagazine

Table of Contents for the Digital Edition of Morningstar Magazine - October/November 2016

Contents
Morningstar Magazine - October/November 2016 - Cover1
Morningstar Magazine - October/November 2016 - Cover2
Morningstar Magazine - October/November 2016 - 1
Morningstar Magazine - October/November 2016 - 2
Morningstar Magazine - October/November 2016 - Contents
Morningstar Magazine - October/November 2016 - 4
Morningstar Magazine - October/November 2016 - 5
Morningstar Magazine - October/November 2016 - 6
Morningstar Magazine - October/November 2016 - 7
Morningstar Magazine - October/November 2016 - 8
Morningstar Magazine - October/November 2016 - 9
Morningstar Magazine - October/November 2016 - 10
Morningstar Magazine - October/November 2016 - 11
Morningstar Magazine - October/November 2016 - 12
Morningstar Magazine - October/November 2016 - 13
Morningstar Magazine - October/November 2016 - 14
Morningstar Magazine - October/November 2016 - 15
Morningstar Magazine - October/November 2016 - 16
Morningstar Magazine - October/November 2016 - 17
Morningstar Magazine - October/November 2016 - 18
Morningstar Magazine - October/November 2016 - 19
Morningstar Magazine - October/November 2016 - 20
Morningstar Magazine - October/November 2016 - 21
Morningstar Magazine - October/November 2016 - 22
Morningstar Magazine - October/November 2016 - 23
Morningstar Magazine - October/November 2016 - 24
Morningstar Magazine - October/November 2016 - 25
Morningstar Magazine - October/November 2016 - 26
Morningstar Magazine - October/November 2016 - 27
Morningstar Magazine - October/November 2016 - 28
Morningstar Magazine - October/November 2016 - 29
Morningstar Magazine - October/November 2016 - 30
Morningstar Magazine - October/November 2016 - 31
Morningstar Magazine - October/November 2016 - 32
Morningstar Magazine - October/November 2016 - 33
Morningstar Magazine - October/November 2016 - 34
Morningstar Magazine - October/November 2016 - 35
Morningstar Magazine - October/November 2016 - 36
Morningstar Magazine - October/November 2016 - 37
Morningstar Magazine - October/November 2016 - 38
Morningstar Magazine - October/November 2016 - 39
Morningstar Magazine - October/November 2016 - 40
Morningstar Magazine - October/November 2016 - 41
Morningstar Magazine - October/November 2016 - 42
Morningstar Magazine - October/November 2016 - 43
Morningstar Magazine - October/November 2016 - 44
Morningstar Magazine - October/November 2016 - 45
Morningstar Magazine - October/November 2016 - 46
Morningstar Magazine - October/November 2016 - 47
Morningstar Magazine - October/November 2016 - 48
Morningstar Magazine - October/November 2016 - 49
Morningstar Magazine - October/November 2016 - 50
Morningstar Magazine - October/November 2016 - 51
Morningstar Magazine - October/November 2016 - 52
Morningstar Magazine - October/November 2016 - 53
Morningstar Magazine - October/November 2016 - 54
Morningstar Magazine - October/November 2016 - 55
Morningstar Magazine - October/November 2016 - 56
Morningstar Magazine - October/November 2016 - 57
Morningstar Magazine - October/November 2016 - 58
Morningstar Magazine - October/November 2016 - 59
Morningstar Magazine - October/November 2016 - 60
Morningstar Magazine - October/November 2016 - 61
Morningstar Magazine - October/November 2016 - 62
Morningstar Magazine - October/November 2016 - 63
Morningstar Magazine - October/November 2016 - 64
Morningstar Magazine - October/November 2016 - 65
Morningstar Magazine - October/November 2016 - 66
Morningstar Magazine - October/November 2016 - 67
Morningstar Magazine - October/November 2016 - 68
Morningstar Magazine - October/November 2016 - 69
Morningstar Magazine - October/November 2016 - 70
Morningstar Magazine - October/November 2016 - 71
Morningstar Magazine - October/November 2016 - 72
Morningstar Magazine - October/November 2016 - 73
Morningstar Magazine - October/November 2016 - 74
Morningstar Magazine - October/November 2016 - 75
Morningstar Magazine - October/November 2016 - 76
Morningstar Magazine - October/November 2016 - 77
Morningstar Magazine - October/November 2016 - 78
Morningstar Magazine - October/November 2016 - 79
Morningstar Magazine - October/November 2016 - 80
Morningstar Magazine - October/November 2016 - 81
Morningstar Magazine - October/November 2016 - 82
Morningstar Magazine - October/November 2016 - 83
Morningstar Magazine - October/November 2016 - 84
Morningstar Magazine - October/November 2016 - 85
Morningstar Magazine - October/November 2016 - 86
Morningstar Magazine - October/November 2016 - 87
Morningstar Magazine - October/November 2016 - 88
Morningstar Magazine - October/November 2016 - 89
Morningstar Magazine - October/November 2016 - 90
Morningstar Magazine - October/November 2016 - 91
Morningstar Magazine - October/November 2016 - 92
Morningstar Magazine - October/November 2016 - 93
Morningstar Magazine - October/November 2016 - 94
Morningstar Magazine - October/November 2016 - 95
Morningstar Magazine - October/November 2016 - 96
Morningstar Magazine - October/November 2016 - Cover3
Morningstar Magazine - October/November 2016 - Cover4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2024q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2024q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019winter
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019fall
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019summer
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019spring
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20191201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20141011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20141201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120405
https://www.nxtbook.com/nxtbooks/morningstar/investorconference2012
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20091011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008catalog
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008winter
https://www.nxtbookmedia.com