Future for Investors Prof. Jeremy J. Siegel ~ The Wharton ... · Future for Investors Prof. Jeremy J. Siegel ~ The Wharton School Milken Institute Global Conference ~ April 26, 2006

Future for InvestorsProf. Jeremy J. Siegel ~ The Wharton School

Milken Institute Global Conference ~ April 26, 2006

Copyright Jeremy J. Siegel Stocks for the Long Run and Future For Investors by Jeremy J. Siegel2

The Aging of the Population

The Most Critical Long-term EconomicIssue Facing the Developed World

The Next Fifty Years


Long Term Demographic Trends

U.S. Life Expectancy and Retirement Age

56

60

64

68

72

76

80

1950-1955

1955-1960

1960-1965

1965-1970

1970-1975

1975-1980

1980-1985

1985-1990

1990-1995

1995-2000

Life Expectancy

Retirement Age

Past marked by (1) rising life expectancy and (2) falling Retirement Age

But this trend Cannot Continue

1.6 Years 14.4 Years


Age Wave -- US


Age Wave – Japan


Big Questions

The Biggest Questions Facing the Developed World

Who Will Produce the Goods?

Who Will Buy the Assets?


Retirement Age must rise dramatically


Life Expectancy

Retirement Age

5660

6468

7276

8084

88

1950

-1955

1955

-1960

1960

-1965

1965

-1970

1970

-1975

1975

-1980

1980

-1985

1985

-1990

1990

-1995

1995

-2000

2000

-2005

2005

-2010

2010

-2015

2015

-2020

2020

-2025

2025

-2030

2030

-2035

2035

-2040

2040

-2045

2045

-2050

`

14.4 Years

9.2 Years


Productivity Growth and Retirement

Can faster productivity growth help the Aging Problem?Let us be extraordinarily optimistic and assume future productivity growth averages 3 ½ % per year, 70% above long term average of 2.2%.


3.5% Productivity reduces retirement age 2-3 years


Life Expectancy

Retirement Age

3.5%Productivity

5660

6468

7276

8084

88

1950

-1955

1955

-1960

1960

-1965

1965

-1970

1970

-1975

1975

-1980

1980

-1985

1985

-1990

1990

-1995

1995

-2000

2000

-2005

2005

-2010

2010

-2015

2015

-2020

2020

-2025

2025

-2030

2030

-2035

2035

-2040

2040

-2045

2045

-2050

`


Immigration?

The number of immigrants to the US over the next 45 years needed to keep the retirement age in the mid 60s would be about one-half billion, far in excess of the current population.


But there is Hope

Outside the developed countries, the population of the world is much younger.Let’s look at India.


Age Wave -- India


Trade Deficits and Aging

Throughout history, the “old” have sold assets to the young in exchange for goods.Today in US, Florida’s retirees sell assets to and import goods from other 49 states.In the future the US will sell its assets to the rest of the world.Success depends on rapid growth in the developing world.


Western Europe 6.41%

U.S.4.68%

Low Income13.64%

Mid Income5.63%

Eastern Europe5.02%

Latin Am/Carib

8.57%

India16.66%

China21.05%

Hi Inc. nonOECD

1.12%

Canada0.51%

Aus / NZ0.38%

Japan2.10%

Sub-Saharan

Africa10.74%

Indonesia3.50%

World GDP 2000Population 2000

84.8%

15.2%

Western Europe

21%

U.S.22%

Low Income5%

Mid Income5%

Eastern Europe

5%

Latin Am/Carib

8%

India5%

China11%

Hi Inc. nonOECD

4%

Canada2%Aus / NZ

1%

Japan8%

Sub-Saharan

Africa2%

Indonesia1%

44.6%

56.4%


Western Europe

6%

U.S.11%

Low Income10%

Mid Income6%

Eastern Europe

3%

Latin Am/Carib

11%

India16%

China20%

Hi Inc. nonOECD

3%

Canada1%

Aus / NZ1%

Japan2%Sub-

Saharan Africa

7%

Indonesia3%

23.1%

76.9%

Population 2050 World GDP 2050


U.S.4.26%

Low Income17.38%

Mid Income5.54%

Eastern Europe2.39%

Latin Am/Carib

8.64%

India16.86%

China15.68%

Hi Inc. nonOECD

1.32%

Canada0.43%

Aus / NZ0.33%

Japan1.17%

Sub-Saharan

Africa18.88%

Indonesia3.34%

11.8%

88.2%

0% 20% 40% 60% 80% 100%

U.S.

Western Europe

Japan

Canada

Aus / NZ

Hi Inc. nonOECD

China

India

Latin Am/Carib

Eastern Europe

Mid Income

Low Income

Sub-Saharan Africa

Indonesia

Per Capita IncomeRelative to US 2000

Per Capita IncomeRelative to US 2050

0% 20% 40% 60% 80% 100%

U.S.

Western Europe

Japan

Canada

Aus / NZ

Hi Inc. nonOECD

China

India

Latin Am/Carib

Eastern Europe

Mid Income

Low Income

Sub-Saharan Africa

Indonesia


Retirement Age with high growth in LDCs

U.S. Life Expectancy and Retirement AgeLife

Expectancy

Retirement Age Developing

Countries High Growth

56

60

64

68

72

76

80

84

88

1950

-1955

1955

-1960

1960

-1965

1965

-1970

1970

-1975

1975

-1980

1980

-1985

1985

-1990

1990

-1995

1995

-2000

2000

-2005

2005

-2010

2010

-2015

2015

-2020

2020

-2025

2025

-2030

2030

-2035

2035

-2040

2040

-2045

2045

-2050

`


The Global Solution

The answer to our question: Who will produce our goods?

Who will buy our assets?

Is the same:The Developing Countries

By the middle of this century Developing Countries will

own most of world’s capital.



U.S.41.21%

Low Income0.53%

Mid Income0.53%

Eastern Europe1.14%

Latin Am/Carib

2.00%India1.90%

China1.19%

Hi Inc. nonOECD

5.30%

Canada2.99%

Aus / NZ2.08%

Japan14.82%

Sub-Saharan

Africa0.38%

Indonesia0.03%


U.S.16.59%

Low Income6.37%

Mid Income5.56%

Eastern Europe3.43%

Latin Am/Carib10.62%

India14.06% China

20.33%Hi Inc.

nonOECD3.15%

Canada1.11%

Aus / NZ0.72%

Japan2.64%

Sub-Saharan

Africa4.23% Indonesia

2.36%

Stock Market Capitalization 2000

7.7% 92.3% 33.0%

67.0%

Stock Market Capitalization 2050


New Professors interviewed at Wharton in 2006

Day Date Type Candidate School Where From?Thursday 12-Jan MICRO Pavel Savor Harvard Canadian from Latin America

Tuesday 17-Jan MACRO Virgiliu Midrigan Ohio State Moldova

Thursday 19-Jan MICRO Camelia Kuhnen Stanford Romania

Thursday 26-Jan MICRO Vito Gala Chicago Italian

Tuesday 31-Jan MACRO Emmanuel Farhi MIT French from N. Africa

Thursday 2-Feb MICRO Gustavo Manso Stanford Brazil

Tuesday 7-Feb MACRO Santiago Bazdresch Yale Mexico

Thursday 9-Feb MICRO Zhi Da Northwestern Singapore

Tuesday 14-Feb MICRO Gustav Sigurdsson Princeton Iceland

Thursday 16-Feb MICRO Jan Schneider British Columbia Germany

Tuesday 21-Feb MICRO Peter Kondor London Economics Budapest/Hungary

Thursday 23-Feb MICRO Dana Kiku Duke Ukraine

Thursday 2-Mar MICRO Yuri Tserlukevich UC Berkeley - Haas Belarus

Wharton Finance Department Recruitment Seminar Schedule: January - March 2006

Baby Boom, Baby Bomb?Baby Boom, Baby Bomb?

Milken Institute Global ConferenceApril 26, 2006

Michael MilkenChairman, Milken Institute

Milken Institute Global ConferenceApril 26, 2006

Michael MilkenChairman, Milken Institute

Sources of Demand for Health CareSources of Demand for Health Care

• Developing world: Growing middle class

• Developed world: Chronologically aging population

• Developing world: Growing middle class

• Developed world: Chronologically aging population

World Geographic Sharesand Population Shares

World Geographic Sharesand Population Shares

Land: 19%Pop: 7%

Land: 19%Pop: 7%

Land: 14%Pop: 7.5%Land: 14%Pop: 7.5%

Land: 8%Pop: 10%Land: 8%Pop: 10%

Land: 24%Pop: 14%

Land: 24%Pop: 14%

Land: 29%Pop: 61%

Land: 29%Pop: 61%

Land: 6%Pop: 0.5%Land: 6%Pop: 0.5%

Economic Shares From GDP, 2005Economic Shares From GDP, 2005

North America South America Europe Africa Asia Australia / N.Z.

35% 4% 28% 1.6% 30% 1.4%

Source: U.S. Department of Agriculture

Economic Shares from GDP, 2030Economic Shares from GDP, 2030

North America South America Europe Africa Asia Australia / N.Z.

25% 3% 12.5% 0.7% 58% 0.8%

2.13.13.63.85.96.16.727.835.244.5

Current GDP(US$ Trillion)

40,901Italy51,594France48,952Germany59,122United Kingdom49,646Russia26,592Brazil66,805Japan17,366India83,710United States31,357China

GDP Per Capita(US$)Country

Top 10 Leading Economies in 2050

Top 10 Leading Economies1820 vs. 2005

1820, Share of World Total

71.770.6Top Ten Total

1.11.7Russia

0.91.8U.S.

1.11.9Spain

1.31.9Austria-Hungary

2.93.1Japan

4.24.9Prussia

2.05.2U.K.

2.95.4France

19.616.0India

35.728.7China

PopulationGDP

2005, Share of World Total

32.970.4Top Ten Total

0.71.8Korea

0.52.5Canada

0.72.6Spain

0.93.9Italy

20.44.4China

0.94.8France

0.95.0U.K.

1.36.4Germany

2.010.6Japan

4.628.4U.S.

PopulationsGDP

Most Wealth Was Created in Last 200 YearsCan we continue this trend for another 200 years?

Population hits 1 billion


20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

2000BCE

1500BCE

1000BCE

500BCE

0 500 1000 1500 1750 2000

Population hits 0.1 billion Population

hits 0.3 billion

Egyptian Empire

Holy Roman Empire

Nation States

Middle Ages

(Feudalism)

Renaissance/ Enlightenment

Industrial Revolution

Bronze Age

Iron Age

Classical/ Roman Period

Population hits 0.5 billion


Rea

l Per

-Cap

ita O

utpu

t (in

U.S

. dol

lars

)

Time

Wealth and Technology

Cotton Gin

Circuit Integrator

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

2000BCE

1500BCE

1000BCE

500BCE

0 500 1000 1500 1750 2000

Rea

l Per

-Cap

ita O

utpu

t (in

U.S

. dol

lars

)

Time

Ceramics

Metallurgy

Paper

EyeglassesPrinting Press

Telescope TelegraphAirplane

TV

CDBarcode

Hubble Telescope

WWWStem Cell Research

Super ComputerCAT Scanning

Computer Operating SystemMinicomputer

Commercial Satellite

Penicillin

PlasticGas-Powered Car

Structural Steel Bridge

In 1900, 40 million Americans livedon farms and fed 76 million domestically plus 15 million people outside the U.S.




Each farm person fed about two others.Each farm person fed about two others.

In 2000, 1.5 million Americans livedon farms and fed 290 million

domestically plus 220 million others







Each farm person fed about 340 others!Each farm person fed about 340 others!

“Everything that can be invented has been invented.”

“Everything that can be invented has been invented.”

Charles H. DuellCommission of U.S. Office of Patents, 1899

Charles H. DuellCommission of U.S. Office of Patents, 1899

On Everything New On Everything New

The iPod has 7,500 times the storage capacity of IBM’s largest computer in 1976

The iPod has 7,500 times the storage capacity of IBM’s largest computer in 1976

The cost-per-megabyte of the IBM computer is 143 million times the iPod.

The Cell Chip by IBM2 trillion calculations per second

The Cell Chip by IBM2 trillion calculations per second

Estimated Cost of Sequencing a GeneEstimated Cost of Sequencing a Gene

• 1974 >$100,000,000

• 1998 $150

• 2002 $9

• 2006 $3

• 2013 $0.03

• 1974 >$100,000,000

• 1998 $150

• 2002 $9

• 2006 $3

• 2013 $0.03

(That’s faster than Moore’s Law.)(That’s faster than Moore’s Law.)

Source: Dr. David Agus-Cedars-Sinai; Dr. Leroy Hood, Institute for Systems BiologySource: Dr. David Agus-Cedars-Sinai; Dr. Leroy Hood, Institute for Systems Biology

Lifestyle Affects Quality of LifeU.S. vs. Japan

Lifestyle Affects Quality of LifeU.S. vs. Japan

Life ExpectancyLife Expectancy

67.6 9.4

73.6 7.7

Healthy yearsHealthy years Disabledyears

Disabledyears

Share of Men in Fair or Poor HealthShare of Men in Fair or Poor Health

Slide courtesy of David Wise, Harvard University

Age of Mortality Milestones for Men, 1940-200065-Year-Olds in 2000 Same as 59-Year-Olds in 1970

4545

5050

5555

6060

6565

7070

7575

19301930 19401940 19501950 19601960 19701970 19801980 19901990 20002000 20102010

YearYear

AgeAge

Age When Mortality Risk Reaches 4%



Source: John Shoven, Stanford University

Age of Mortality Milestones for Women, 1940-200063-Year-Olds in 2000 Same as 59-Year-Olds in 1970Age of Mortality Milestones for Women, 1940-200063-Year-Olds in 2000 Same as 59-Year-Olds in 1970

5050

5555

6060

6565

7070

7575

8080

19301930 19401940 19501950 19601960 19701970 19801980 19901990 20002000 20102010

YearYear

AgeAge




Source: John Shoven, Stanford University

Source: Richard Sprott, Ellison Medical Foundation

Source: Richard Sprott, Ellison Medical Foundation

“Improvements in life expectancy alone added approximately $2.6 trillion per year … to national wealth over the 1970-1998 period.”

Kevin Murphy and Robert Topel“The Economic Value of Medical Research”

“Improvements in life expectancy alone added approximately $2.6 trillion per year … to national wealth over the 1970-1998 period.”

Kevin Murphy and Robert Topel“The Economic Value of Medical Research”

Source: Research America

Economic Value of Eliminating DeathsEconomic Value of Eliminating Deaths

$50T$50T

4040

3030

2020

1010AIDS

Source: Kevin M. Murphy and Robert H. Topel/University of Chicago

H E

A R

TD

I S

E A

S E

C A

N C

E R

STROKE

$57T$57T

$46.5T$46.5T$48.4T$48.4T

$7.6T$7.6T $7.5T$7.5T

2 0

0 4

U.S

. B

A L

A N

C E

S

H E

E T

The number of cancer deaths in the U.S. dropped slightly in

2003, the first decline in more than 70 years.

-American Cancer SocietyFebruary 9, 2006

The number of cancer deaths in the U.S. dropped slightly in

2003, the first decline in more than 70 years.

-American Cancer SocietyFebruary 9, 2006

P=ΣFti*(ΣHCi+ΣSCi+ΣRAi)P=ΣFti*(ΣHCi+ΣSCi+ΣRAi)

P = ProsperityFt = Financial TechnologyHC = Human CapitalSC = Social CapitalRA = Real Assets

P = ProsperityFt = Financial TechnologyHC = Human CapitalSC = Social CapitalRA = Real Assets

America Goes to WorkU.S. and Fortune 500 EmploymentAmerica Goes to Work

U.S. and Fortune 500 Employment

0000959590908585808075757070

200200

180180

160160

140140

120120

100100

8080

6060

Index 1970 = 100Index 1970 = 100

U.S. = +62 million jobsU.S. = +62 million jobs

Fortune 500 = minus 4 millionFortune 500 = minus 4 million

America Goes to WorkU.S. and Fortune 500 EmploymentAmerica Goes to Work

U.S. and Fortune 500 Employment

0000959590908585808075757070

200200

180180

160160

140140

120120

100100

8080

6060

Index 1970 = 100Index 1970 = 100

U.S. = +62 million jobsU.S. = +62 million jobs

Fortune 500 = minus 4 millionFortune 500 = minus 4 million

New financialtechnologies arefully implemented

New financialtechnologies arefully implemented

959590908585808075757070

170170

160160

150150

140140

130130

120120

110110

100100

9090

Index 1970=100Index 1970=100

Western EuropeWestern Europe

Job Creation Since 1970Job Creation Since 1970

United StatesUnited States

200019991998199719961995199419931992

14

12

10

8

6

4

2

Percent

France, Germany, Italy (Avg.)France, Germany, Italy (Avg.)

United KingdomUnited Kingdom

U.K. Teaches a LessonUnemployment: U.K., France, Germany, Italy

U.K. Teaches a LessonUnemployment: U.K., France, Germany, Italy

Hernando de SotoPresidentInstituto Libertad y Democracia

Hernando de SotoPresidentInstituto Libertad y Democracia

“For the past 30 years the poor in most places have been more interested in becoming entrepreneurs than revolutionaries.”

“For the past 30 years the poor in most places have been more interested in becoming entrepreneurs than revolutionaries.”

Source: New York Times

Dead CapitalDead Capital

Dead Capital: $241 billionDead Capital: $241 billion

Equity Market Capitalization: $20.9 billionEquity Market Capitalization: $20.9 billion

Dead Capital: $315 billionDead Capital: $315 billion

Equity Market Capitalization: $91.5 billionEquity Market Capitalization: $91.5 billion

EgyptEgypt MexicoMexico

Housing Price Change, 1997-2004Housing Price Change, 1997-2004

Total value of residential property in developing countries

increased by $20 trillion in the past 3 years.

HKHKJapJap

SwitSwitCanCan

DenDenNZNZ

BelgBelgItlItl

USAUSANethNeth

SweSweFraFra

AusAusSpaSpa

UKUKIrelIrel

S AfrS Afr

280280

210210

140140

7070

00

-70-70

% change, 1997-2004

200520032001199919971995

10

9

8

7

6

5

4

12.5

10.8

9.0

7.3

5.5

3.8

2.0

Percent US$ Trillions

Mortgage Rate and Mortgages Outstanding

Mortgage Rate and Mortgages Outstanding

$11.9 trillions total mortgages

outstanding

30-years fixed mortgage rate

4.04.5

5.05.5

6.06.5

7.07.5

8.08.5

9.0Max = 10

U.S.

United Kingdom

China

Russia

Brazil

India

Hong Kong Czech Republic

Capital Access Index 2005Gauging Entrepreneurial Access to Capital

World Equity Market PerformanceTop 10 USD Adjusted Returns, 2005


IcelandIcelandQatarQatar

KuwaitKuwaitRussiaRussia

JordanJordanS. ArabiaS. Arabia

LebanonLebanonColombiaColombia

UAEUAEEgyptEgypt

180180

160160

140140

120120

100100

8080

6060

4040

Percent Change, Year AgoPercent Change, Year Ago

How to Save $1-Million in 40 YearsHow to Save $1-Million in 40 Years

Rate-of-Return ConcernsRate-of-Return Concerns

$25,000-a-year @ 0%

$6,642-a-year @ 6%

$1,304-a-year @ 12%

(or a one-time investment of $10,747)

$25,000-a-year @ 0%

$6,642-a-year @ 6%

$1,304-a-year @ 12%

(or a one-time investment of $10,747)

Effect of Changes in Actuarial Assumptions

$100 invested over 30 years

Effect of Changes in Actuarial Assumptions

$100 invested over 30 years

20% $ 23,73814% $ 5,09512% $ 2,99610% $ 1,7458% $ 1,0066% $ 574

20% $ 23,73814% $ 5,09512% $ 2,99610% $ 1,7458% $ 1,0066% $ 574

March 2006March 2006

Copyright: John Ditchburn

Good news! It appears you older workers are valuable after all!

Percentage Change in U.S. PopulationBy Age Group, 2000 to 2025

Percentage Change in U.S. PopulationBy Age Group, 2000 to 2025

65+65+55 - 6455 - 6435 - 5435 - 5418 - 3418 - 340 - 170 - 17

100100

8080

6060

4040

2020

00

-20-20

14%14% 14%14%

-1%-1%

67%67%80%80%

[Some of the following slides were used

during the conversation.]

[Some of the following slides were used

during the conversation.]

Nelson Mandela, 87Elected president of South Africa

at age 76.

Nelson Mandela, 87Elected president of South Africa

at age 76.

Kirk Kerkorian - 88Kirk Kerkorian - 88

Winston ChurchillBritish Prime Minister at age 71Member of Parliament to age 90

Winston ChurchillBritish Prime Minister at age 71Member of Parliament to age 90

Oliver Wendell Holmes Jr.Served as Supreme Court Justice until age 90

Oliver Wendell Holmes Jr.Served as Supreme Court Justice until age 90

Dr. Armand Hammer Founded the Armand Hammer Museum

of Art and Cultural Center in Los Angeles in 1990 at age 92

Dr. Armand Hammer Founded the Armand Hammer Museum

of Art and Cultural Center in Los Angeles in 1990 at age 92

Siberia

How about Oslo?

How about Oslo?

Average January Temperature:

How about Oslo?

Average January Temperature:19◦

Dubai?

Dubai?

Average July Temperature:

Dubai?

Average July Temperature:103◦

Los Angeles

Year-round average temperature:65◦

U.S. Reading Skills in Urban Districts% of 4th Graders Below “Basic” Levels

U.S. Reading Skills in Urban Districts% of 4th Graders Below “Basic” Levels

District of Columbia 69%

Los Angeles 65%

Atlanta 63%

Chicago 60%

Houston 52%

New York City 47%

Central City 45%Central City 45%

National Public 38%National Public 38%70%70%50%50%30%30%10%10%

Source: NAEP 2004

19781978

1.4% of college-age population was enrolled in college.

1.4% of college-age population was enrolled in college.

20052005

20% of college-age population enrolled in college.

20% of college-age population enrolled in college.

Growth in Number of Chinese College Students

Growth in Number of Chinese College Students

Source: China’s Ministry of Education

• 3 billion people – ½ the world’s population – will live in “water-stressed” countries.

• Water tables are dropping dramatically

• 5 feet per year in Northern China

• 3-10 feet per year in India

• More than 30 nations get water from outside their borders.

• Over-pumping groundwater will increase political tension.

• 3 billion people – ½ the world’s population – will live in “water-stressed” countries.

• Water tables are dropping dramatically

• 5 feet per year in Northern China

• 3-10 feet per year in India

• More than 30 nations get water from outside their borders.

• Over-pumping groundwater will increase political tension.

Water Crisis in the Developing World (2000-2015)

Water Crisis in the Developing World (2000-2015)

Global Trends 2015/National Intelligence CouncilGlobal Trends 2015/National Intelligence Council

Atmospheric CO2Atmospheric CO2

18% increase in CO2in 44 years

• $180 billion available• $50,000 for every man, woman and child• $180 billion available• $50,000 for every man, woman and child

Norway’s Surplus Oil MoneyNorway’s Surplus Oil Money

If there were $50,000 for each of 300 million Americans …

it would equal $15 trillion.

If there were $50,000 for each of 300 million Americans …

it would equal $15 trillion.

Norway $225B: $50,000/person

Singapore $250B+: $56,000/person

Abu Dhabi $250B+: $200,000/person

Norway $225B: $50,000/person

Singapore $250B+: $56,000/person

Abu Dhabi $250B+: $200,000/person

199497Degrees awarded in computer science, engineering and IT, per 1,000,000 people

6330Infant mortality rate, per 1,000 live births

116Children 10-14 in the labor force, % of age group

6371Life expectancy at birth

2415Births rate, per 1,000 people

20/351/2Youth illiteracy rate, % Age 15-24, Male/Female35/8017/47Poverty, population below $1/$2 a day, %

1534Exports of goods and services / GDP, %

3245Female % of labor force1,0641,288Population, millions2,8785,087GDP per capita, PPP, $3,0236,574GDP, PPP, $ billionIndiaChina

China or India?


IcelandQatar

KuwaitRussia

JordanS. Arabia

LebanonColombia

UAEEgypt

180

160

140

120

100

80

60

40

Percent Change, Year Ago

Stock Market Dec. 31, 1989

Nikkei 38,915

Dow Jones 2,753

Stock Market Dec. 31, 1989

Nikkei 38,915

Dow Jones 2,753

Stock Market Dec. 31, 1989 April 25, 2006

Nikkei 38,915 17,010

Dow Jones 2,753 11,283


Nikkei 38,915 17,010

Dow Jones 2,753 11,283


Nikkei 38,915 17,010

Dow Jones 2,753 11,283


Nikkei 38,915 17,010

Dow Jones 2,753 11,283

Nikkei is down 56%.

Dow Jones up four-fold.

World’s Equity Market ShareDecember 1988 vs. March 2006

Market Capitalization1988

Other14%

Europe26%

U.S.29%

Japan40%


Other15%

Europe26%

U.S.46%

Japan11%

World’s Equity Market ShareDecember 1950 vs. March 2006


Other6%

Europe26%

U.S.59%Japan

9%


Other15%

Europe26%

U.S.46%

Japan11%

21 million21 million





10 million10 million5 million5 million


19501950

20002000

20502050

21002100

21502150

22002200

22502250

23002300

Japan’s Population ImplosionJapan’s Population Implosion

19001900

Foreign Holdings of U.S. Securitiesby Selected Countries

US$ 6 trillion, June 2004

Japan17%

United Kingdom

8%

Luxembourg7%

Rest of world37%

Singapore 2%Taiwan 2%Germany 3%

S. Korea 1%France 2%

HK1%Italy 1%

Spain <1% Belgium 5%Switzerland 3%

China 6%Poland <1%

Unknown 4%

Countries that Export Capital: 2004Japan is the largest exporter of capital

Japan20%

Germany12%

China8%

Russia7%Saudi Arabia

6%

Other countries

22%

Taiwan2%

Switzerland5%

Norway4%

Sweden3%Singapore

3%

Korea3%

Canada3%

Netherlands2%

Homes Price and Availability 3+ millions homes and condos for sale Feb. 2006

Homes Price and Availability 3+ millions homes and condos for sale Feb. 2006

Average home price (R)

Number of units available for sale

(L)

2005200420032002200120001999

3.2

3.0

2.8

2.6

2.4

2.2

2.0

1.8

1.6

300

280

260

240

220

200

180

160

140

Million of Units USD Thousands

Documents

Future for Investors Prof. Jeremy J. Siegel ~ The Wharton ... · Future for Investors Prof. Jeremy J. Siegel ~ The Wharton School Milken Institute Global Conference ~ April 26, 2006