Truth is, the market doesn't deliver returns in a straight line. Market ups and downs are normal, and it takes a lot of them to balance out to the average. In any period of market volatility, when peaks and valleys are evident, investors must evaluate their circumstances and risk tolerance. While investors can enjoy the benefits of gains in their portfolios, they must also understand that they can suffer losses when the market goes the other way. To capture the average, which historically is better than 10%, you have to be in the market for the long haul. In fact, the market produced gains in 59 out of the last 82 years—more than twice as often as it produced losses.



Source: © 2008 Ibbotson Associates, Inc. All rights reserved. Any copying, republication, or redistribution of Ibbotson data is expressly prohibited without prior written consent of Ibbotson. Ibbotson proprietary rights; this slide may not be distributed.

¹ Large company stocks represented by the S&P 500® Index. The S&P 500 Index is widely regarded as the standard for measuring large cap U.S. stock market performance, and includes a representative sample of leading companies in leading industries. The index is unmanaged and is not available for direct investment.

Stocks, historically, have outperformed other asset classes over the long term, but tend to fluctuate more dramatically over the short term. The historical data are for illustrative purposes only, do not represent the performance of any Lord Abbett mutual fund, and are not indicative of any specific investment.

Performance data quoted above are historical. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance data quoted.

Successful investing requires the ability to endure market corrections, both short and long. Surges can come on suddenly, and often the biggest rallies come on the heels of a correction. True market downturns, historically, have lasted only a short while, approximately six months on average. Leaving when the market's down means you'll forfeit the great returns that typically have followed a downturn. In fact, the market has historically posted a 25% return, on average, in the 12 months following a correction. Another important concept to grasp is the importance of managing downside risk, or years of large negative returns. Along with the help of your financial advisor, you should carefully consider what level of exposure to stocks is appropriate given your risk tolerance, time horizon, and needs.



Source: Ibbotson.

¹ Maximum and minimum values of returns for 1-, 5-, 10-, and 20-year holding periods for large company stocks as represented by the S&P 500 Index.
² Positive returns out of overlapping 5-, 10-, and 20-year periods.

Keep in mind that an investment cannot be made directly in an index.
The charts above are for illustrative purposes only and are not indicative of any investment.

Past performance is no guarantee of future results.

As an investor, you should know that within any 10-year period, both bull and bear markets are likely. During the past 10 years,¹ the S&P 500^® Index realized a cumulative return of 77.56%. However, to have benefited from such performance, an investor would have had to stay the course through periods of significant volatility. For example, an investor who missed just 10 of the best-performing days² in the past decade would have lost out on more than three-quarters of the gains. Missing just 20 of the best-performing days would have generated a negative return.

¹12/31/97 - 12/31/07.



Source: Standard & Poor's and Lord Abbett.

³ This illustration is based on the growth of a $10,000 investment over the 10-year period ended December 31, 2007. Results are hypothetical and for illustrative purposes only.

The S&P 500 Index is widely regarded as the standard for measuring large cap U.S. stock market performance, and includes a representative sample of leading companies in leading industries. The index is unmanaged, does not reflect the deduction of fees or expenses, and is not available for direct investment.

Past performance is no guarantee of future results.

Stocks, historically, have outperformed other asset classes over the long term, but tend to fluctuate more dramatically over the short term.