Economic Outlook

The Ziegler Advisor

• Ziegler Quarterly Market Update
  A Wall Street Journal article recently reported that the S&P 500 Index return was essentially flat between 1999 and today. In fact the S&P declined 15% between March of 2000 and the close of the first quarter 2008, dropping from 1552 to 1322. The market is up from the 2002 low of 763, however, so the news isn’t all bad. So what is the stock market telling us? In order to understand what this means to investors we have to decompose the information provided in stock prices. Prices are a view into: 1) investor sentiment - which results in demand for stocks; 2) investors’ perspective on the impact future inflation will have on their returns; and 3) the risk premium required to invest in stocks over other asset classes.