Setbacks

MSCI AC World index (which includes emerging markets) is up 113% since March 2003.
The MSCI Emerging market index is now 181% above its 2003 low and
214% above its late 1990s high. Europe, Japan, and Asia Pac (ex Japan) have
seen similar performances since 2000 (+130%). Although the U.S. has lagged
(+88% since 2003), this is still a respectable absolute performance. It has been
a global bull market.We all know that markets don’t rise in a straight line.
This four-year bull market has seen four meaningful (5%+) setbacks. Each has
followed a 15%+ rally in the World index and has offered an opportunity to buy
ahead of the next upward move. Sure, these sell-offs may have been painful for
leveraged traders (especially the 11% setback in May 2006), but the biggest
mistake for any long-term investor would have been to sell into these dips.
Source: Smith Barney, Portfolio Strategist.