October 23 2009 Europe: Portfolio Strategy Exhibit 9: Division of the early 1980s cycle into phases for the UK and Us United Kingdom Cumulative Change May-79 May-80 May-81 May-82 May-83 May-84 May-85 May-86 May-87 H Start date04/05/197928/09198124/06/198324/091985 End date28/09M198124/06/198324/09198516/07/1987 Real Return 21.5 13 12.0 P/E 51.6 9.9 Proportion of return 33.6 13.6 52.8 13.5 27.8 Earnings Growt Change in real interest rate (pp) 2.4 18 0.3 United sta N-84 Nov-86 US Recessions Returns Earnings--PE End date1208/198222/06/198324/07/198425/081987 leal Retum Change in real interest rate(pp) Source: Worldscope, Compustat, Haver Analytics, Datastream, Goldman Sachs Global ECS Research.October 23, 2009 Europe: Portfolio Strategy Goldman Sachs Global Economics, Commodities and Strategy Research 11 Exhibit 9: Division of the early 1980s cycle into phases for the UK and US United Kingdom 0 50 100 150 200 250 May-79 May-80 May-81 May-82 May-83 May-84 May-85 May-86 May-87 US Recessions Returns Earnings PE Cumulative Change <----------Despair-----------> <---------Grow th--------> <-----Hope-----> <---Optimism---> Despair Hope Growth Optimism Start date 04/05/1979 28/09/1981 24/06/1983 24/09/1985 End date 28/09/1981 24/06/1983 24/09/1985 16/07/1987 Length (in months) 28.9 20.8 27.1 21.7 Real Return -29.5 53.0 21.5 83.4 Real Earnings Growth -11.3 0.9 51.6 12.0 P/E expansion -20.5 51.6 -19.9 63.7 Proportion of return (%) 33.6 13.6 52.8 Annualized Real Return -13.5 27.8 9.0 39.9 Earnings Growth -4.9 0.5 20.3 6.5 Change in real interest rate (pp) 2.4 -1.8 1.6 0.3 United States 20 70 120 170 220 270 Nov-80 Nov-81 Nov-82 Nov-83 Nov-84 Nov-85 Nov-86 US Recessions Returns Earnings PE Cumulative Change <--------Despair---------> <---Grow th---> <Hope> <----------------Optimism---------------> Despair Hope Growth Optimism Start date 20/11/1980 12/08/1982 22/06/1983 24/07/1984 End date 12/08/1982 22/06/1983 24/07/1984 25/08/1987 Length (in months) 20.7 10.3 13.1 37.1 Real Return -37.0 63.1 -18.3 101.4 Real Earnings Growth -15.5 -3.4 20.8 -19.1 P/E expansion -25.5 68.9 -32.4 149.0 Proportion of return (%) 43.2 -12.5 69.4 Annualized Real Return -23.5 76.6 -16.9 25.5 Earnings Growth -9.3 -3.9 18.9 -6.6 Change in real interest rate (pp) 0.1 -1.9 3.4 -0.8 Source: Worldscope, Compustat, Haver Analytics, Datastream, Goldman Sachs Global ECS Research