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May 2006 Equities Market Correction More Severe
Than Immediate Sell-Off In March 2000

Houston, Texas, May 25, 2006 - Even after today’s equity rally, the severity of the recent market correction, when measured on a return basis, has been nearly twice as intense as the decline that occurred following the stock market highs of March 2000, according to CPMKTSsm The Capital Markets Index, the first and only measure of the total return of the U.S. investment-grade capital markets.

The Capital Markets Index, created by Dorchester Capital Management Company of Houston, is carried on The American Stock Exchange under the symbol CPMKTS with updates every 15 seconds. The Amex also publishes sub-indexes CPMKTE, CPMKTB and CPMKTL, tracking equities, bonds and liquidity, respectively. Dorchester utilizes market and government data to adjust the weights used in calculating CPMKTS, ensuring the index reflects the total return of the markets, based on actual asset allocation available to the investor.

According to Dorchester, the intensity of the May 2006 sell-off has been evident both in the negative returns posted in its equities market index and in its broader capital markets (comprising equities, bonds and money market instruments) index. Specifically, the company noted:

  • The returns for CPMKTEsm The Capital Markets Equity Index declined 4.28% in the 16-day period following May 9, 2006, when the index hit a record of 10731.36. The decline was far deeper than the 2.41% decrease posted by the index in the same period following March 24, 2000, when it hit its previous record.
  • The broader CPMKTSsm The Capital Markets Index registered a decline of 2.17% in the 16-day period of May 2006, a sharper sell-off than the 1.28% decrease posted in the 2000 period. Dorchester noted that bond returns in the current 16-day period were just 0.25%, lower than the 1.36% gain posted in 2000.

Dorchester added that with CPMKTEsm closing today at 10272.13, the index was lower than its March 24, 2000, high, indicating stock market investors could have incurred a negative return in the period even after reinvesting dividends. In contrast, the company said The Capital Markets Index in the same period posted a positive return because of bond and liquidity market returns.

About Dorchester Capital Management Co.
Dorchester Capital Management Company is a Houston-based company principally focused on designing financial products for the professional investment community. For additional information, please visit www.cpmkts.com.

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