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1Q2013 was again a strong quarter for U.S. stocks. Stocks in the quarter returned what bulls hope for in a full year. The five-year total return shown encompasses the financial-crisis bear market and recovery through 1Q2013.

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Small-cap growth companies in the Russell 2000 index showed total return of 13.2% in 1Q2013, as the U.S. stock rally continued to confound skeptics. Bulls said a “great rotation” from bonds to stocks was under way.

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Tech companies, while a fascination, last quarter were among the weakest of the 10 industry indexes of S&P 500 companies. Consumer stocks were among top sectors; reflecting a recovery in consumer balance sheets.

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Of 11 asset classes, commodities were by far the worst performing in the five years ended 3/31/2013, highlighting the risk of betting on any one asset class. The best asset class, as represented by these 11 stock and bond ETFs and indexes, was gold, which lost luster last quarter.

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U.S. stocks outperformed stock markets of foreign regions across the world for the five years ended 3/31/2013. The period encompasses a bear market in 2008 and recovery through 1Q2013. The U.S. economy did show resilience versus foreign markets in the period.  

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Estimated S&P 500 earnings per share as of March 21, 2013 was $112.21 for 2013 and $125.31 for 2014. If consumer spending holds and companies meet expectations, the trajectory of stock prices versus earnings is shown in the red squares in the chart above.  

Past performance does not indicate future results.   Indices and ETFs representing asset classes are unmanaged and not recommendations for any specific investment. Foreign investing involves special risks, including political or economic instability and currency fluctuation. Bonds offer a fixed rate of return while stocks fluctuate.  Actual S&P 500 index data through 3/31/2013 and actual earnings through 12/31/2012. Estimated 2013 and 2014 S&P 500 earnings per share as of March 21, 2013. Sources: Yardeni Research, Inc. and Thomson Reuters I/B/E/S survey of consensus estimates; Standard and Poor’s for index prices through 3/28/13 and actual earnings.