A Look Back at Historical Performance

New data published by Morningstar offers a historical perspective on the market returns of major asset classes.
The data, which reflects updated historical market figures* for the major asset classes from the beginning of 1926 through 2006, and for the year just ended, is based on data from Ibbotson Associates:
1926 Forward
Large-Company Stocks (as measured by the S&P 500) returned 10.4% per year (unchanged from 2005)
Small-Company Stocks (bottom 20% of companies by market cap on the NYSE and companies of similar size on the NASDAQ and AMEX) returned 12.7% per year (compared to 12.6% from 1926 through 2005).
Bonds (long-term government) returned 5.4% per year (compared to 5.5% from 1926 through 2005)
Cash (30-day T Bill) returned 3.7% per year (unchanged from 2005)
Inflation remained 3.0%
2006 returns:
Large-Company Stocks returned 15.8%, compared to 4.9% in 2005.
Small-Company Stocks returned 16.2%, compared to 5.7% in 2005 (8th year in a row that the index beat large-cap stocks. Last time small stocks had a run that long was the 10-year period from 1974 through 1983)
Bonds returned 1.2% (lowest return since 1999), compared to 7.8% in 2005
Cash returned 4.8%, compared to 3.0% last year
Inflation was 2.0% down from 3.4% last year
*These numbers are not adjusted for inflation and assume reinvested dividends.