Elections Come and Go. Results Last a Lifetime. Market Declines and Recessions
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A review of U.S. presidential elections Elections come and go. Results last a lifetime. Market declines and recessions Set your sights on the long term CLOSED CLOSED Investor doubts may seem especially prevalent during presidential election years when campaigns spotlight the country’s challenges. Yet even with election year rhetoric amplifying the negative, it’s Overseas conflict Businesses going important to focus on your vision for the future. and war There have always been bankrupt “ The only limit to tumultuous events. our realization of Keep in mind the following: The current economic and political challenges tomorrow will be our • Successful long-term investors stay the course and rely on time may seem unprecedented, but a look back doubts of today.” rather than timing. shows that controversy and uncertainty • Investment success has depended more on the strength and have surrounded every campaign. — Franklin D. Roosevelt resilience of the American economy than on which candidate CLOSED or party holds office. CLOSED • The experience and time-tested process of your investment manager can be an important contributor to your long-term Weather-related investment success. Civil unrest and calamities protest CLOSED Labor market struggles 1936 1940 1944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Democrat Republican Franklin D. Franklin D. Franklin D. Harry Truman Dwight Dwight John F. Kennedy Lyndon Johnson Richard Nixon Richard Nixon Jimmy Carter Ronald Reagan Ronald Reagan George H.W. Bill Clinton Bill Clinton George W. Bush George W. Bush Barack Obama Barack Obama Donald Trump Roosevelt Roosevelt Roosevelt vs. Eisenhower Eisenhower vs. vs. vs. vs. vs. vs. vs. Bush vs. vs. vs. vs. vs. vs. vs. vs. vs. vs. Thomas Dewey vs. vs. Richard Nixon Barry Goldwater Hubert George Gerald Ford Jimmy Carter Walter Mondale vs. George H.W. Bob Dole Al Gore John Kerry John McCain Mitt Romney Hillary Clinton Alf Landon Wendell Willkie Thomas Dewey Adlai Stevenson Adlai Stevenson Humphrey McGovern Michael Dukakis Bush U.S. remains Isolationism FDR’s health in Civil rights tension U.S. detonates Mideast trouble Cuba nationalizes Civil Rights Act Vietnam protests Watergate scandal New York City Iran hostage Budget deficits Savings and Los Angeles riots 19 American Tech bubble Oil prices soar Subprime High-stakes Rise of populism in grip of vs. engagement question boils over at first hydrogen as Egypt seizes U.S. assets passes after and civil rights surfaces threatens crisis drags on rising rapidly loan crisis highlight racial servicemen bursts; stock mortgage crisis negotiations lead affects elections Depression hotly debated convention bomb Suez Canal lengthy filibuster issues roil bankruptcy reaches apex tension killed in Saudi markets plummet Ongoing wars to a deal to avert around the world Potential Post-War American U-2 conventions Vietnam War Olympic boycott Stock market Arabia bombing in Iraq and Lehman Brothers the “fiscal cliff” Nazi rise Germany impact of Berlin blockade Attempts at Soviets invade spy plane shot Gulf of Tonkin drags on Economy mired underscores slides over 30% Iran-Contra Pending NAFTA Attack on USS Afghanistan collapse; world The U.K. votes troubles Europe menaces Europe; New Deal debated accelerates Korean War Hungary down in Soviet signals Vietnam RFK and Martin in recession Cold War divide in less than indictments ratification UN arms Cole heightens markets fall Superstorm Sandy to leave the France falls Cold War truce fail airspace involvement Luther King Jr. four months creates anxiety inspectors terrorism concerns kills 268 people European assassinated repeatedly and causes $68 Union thwarted in Iraq billion in damage Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. ® The Investment Company of America Figures shown are past results for Class F-2 shares with all distributions reinvested and are not $200,000,000 predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods ICA with dividends 21 elections and counting reinvested makes losses more likely. For current information and month-end results, visit capitalgroup.com. $18,662,5472 100,000,000 As you can see in the mountain chart below, a hypothetical $10,000 investment in Average annual 80,000,000 The Investment Company of America has grown steadily and significantly over the fund’s 85-year history. return: 12.1% 60,000,000 Additionally, a hypothetical $10,000 investment in ICA made at the beginning of an election year was Stock market with dividends reinvested 40,000,000 always larger 10 years down the road. $57,809,008 19 Average annual Dwight return: 10.7% $10,000 investment 1952 Eisenhower 20,000,000 10 years later Dwight Hurricanes pummel the and Caribbean U.S. war with China trade U.S. Greek debt crisis Greek slows China growth ofWave populism affects world elections around Dividends reinvested 1948 Eisenhower conflict into Syrian drawn U.S. Year five of government’s federal Year policy uantitative easing ICA with dividends during period Dow Jones tops 12000 for first time 10,000,000 recession U.S. excluded Harry $33,264 crisis Subprime credit U.S. faces “fiscal cliff” U.S. 3 Hurricanes devastate southern .S. Terrorist attacks in .S. Gulf of oil spill Mexico $12,749,308 European sovereign debt crisis sovereign European Truman Internet bubble bursts 8,000,000 1944 Oil prices soar Corporate accounting scandals $46,825 unemployment tops 10% U.S. Fears of 2K computer problems Average annual Franklin .S. invades Ira return: .% 6,000,000 Global economic turmoil Roosevelt $4,190 Chaos in Asian markets 1 4,000,000 1936 Average Technology stocks stumble Dow tops 000, then 000 market too high $33,980 $6,492 rates interest raises Fed six times Midwestern U.S. floods Midwestern U.S. annual return: Mile Island Three accident nuclear Franklin Angeles Los riots Ira invades Kuwait Ira Massacres in Cambodia Massacres Energy crisis Energy Problems with Problems junk bonds Roosevelt 12.8% in .S. Recession Soviet nion dissolves Average Record-setting decline market Stock market with New ork City New ork bankruptcy threatens $29,570 $6,942 Oil embargo 2,000,000 withdraws U.S. ietnam from dividends excluded Watergate 1940 annual return: peak Bank failures U.S. bombs Libya U.S. Nixon resigns Nixon Wage-price freee Wage-price $2,482,00 Money tightens falls market 1.7% captures North Korea SS ueblo Franklin invades Cambodia U.S. Average becomes a U.S. debtor nation Average annual $7,416 Newark riots Roosevelt annual return: war Iran-Ira escalates return: 6.% 1,000,000 $27,723 ietnam War escalates Soviets shoot down airliner Korean Average 13.0% Civil rights marches 800,000 recession Worst in 0 years Gulf of Tonkin annual return: Reagan and the pope are shot Abscam scandal Congress rocks $4,156 assassination Kennedy Cuban Missile Crisis Cuban Missile Value added by reinvestment 600,000 11.5% is erected Wall Berlin of dividends Soviets down -2 plane $25,991 seies power in Cuba Castro 400,000 Average annual return: Recession Soviets launch Sputnik 10.7% $6,565 Sue Crisis Eisenhower illness 190 1964 1968 1972 197 1980 1984 1988 1992 1996 2000 2004 2008 200,000 Average John F. Lyndon Richard Richard Jimmy Ronald Ronald George H.W. Bill Bill George W. George W. Barack annual return: too high Dow tops 300 market Consumer Price Kennedy Johnson Nixon Nixon Carter Reagan Reagan Bush Clinton Clinton Bush Bush Obama Index (inflation) Soviets detonate H-bomb U.S. seies steel mills U.S. 10.0% tax profits Excess $190,328 $53,508 Dow tops 200 too high market $49,044 Average annual 100,000 War Korean Berlin blockade $41,411 $45,955 return: 3.5% Post-war recession Post-war predicted Soviets detonate A-bomb 80,000 War begins Cold $28,002 $34,912 $28,319 $23,598 $21,404 60,000 $22,958 $20,333 Consumer goods shortages Consumer $17,232 Industry mobilies $9,300 $10,170 $13,025 Recession $4,353 $5,076 $4,314 $5,596 $7,656 $5,669 $4,072 $3,671 40,000 $2,391 $2,905 $2,665 Economy still struggling France falls France War in Europe War Wartime price controls Wartime Pearl Harbor Pearl Average Average Average Average Average Average Average Average Average Average Average Average Average War clouds gather War annual return: annual return: annual return: annual return: annual return: annual return: annual return: annual return: annual return: annual return: annual return: annual return: annual return: Civil war in Spain 20,000 10.8% 9.0% 5.% 8.7% 17.2% 18.3% 1.3% 1.5% 13.3% 11.0% 2.7% 7.4% 7.9% Depression 10,000 Original investment 8,000 $10,000 ear ended Dec. 31 193 193 193 1937 1938 1939 190 191 192 193 19 19 19 197 198 199 190 191 192 193 19 19 19 197 198 199 190 191 192 193 19 19 19 197 198 199 1970 1971 1972 1973 197 197 197 1977 1978 1979 1980 1981 1982 1983 198 198 198 1987 1988 1989 1990 1991 1992 1993 199 199 199 19971998 1999 2000 2001 2002 2003 200 200 200 2007 2008 2009 2010 2011 2012 2013 201 201 201 2017 2018 Capital value $ in 000 Dividends — $0.5 1.1 0.2 0.6 0.9 1.2 1.1 1.0 1.1 1.0 1.4 1.8 2.0 1.9 2.1 2.2 2.2 2.3 2.4 2.9 3.1 3.3 3.4 3.6 4.0 4.1 4.3 4.5 4.9 5.4 6.7 7.8 9.4 10.2 10.5 10.8 11.0 11.8 17.4 15.8 14.3 14.8 16.0 19.3 24.1 29.1 34.7 33.6 35.1 36.9 41.8 52.9 60.3 67.6 71.2 55.2 60.0 61.4 65.0 70.3 74.0 78.0 88.1 97.4 109.3 115.2 116.1 118.0 120.0 156.6 174.5 166.9 179.3 154.7 153.1 158.2 194.7 175.4 215.2 201.3 236.8 243.5