We are often asked about the nature of our investment research and how it is affected by our parent organization, the American Institute for Economic Research (AIER). Indeed, in the world of money management it is an unusual arrangement, but one that confers benefits to both organizations and, by extension, to the donors, subscribers, and clients that both entities serve.

AIER is an independent scientific and educational organization, established as a public charity. Its research is planned to “help individuals protect their personal interests and those of the Nation.” AIS, on the other hand, is a for-profit, tax-paying SEC registered investment advisor (organized as a “C corp.”) that competes directly with thousands of money managers across the nation. The AIS mission statement follows: American Investment Services (AIS) provides investment advice and information based on portfolio diversification, discipline and cost effectiveness, consistent with the scientific research findings of the American Institute for Economic Research (AIER). We serve the interests of individuals and organizations through these advisory services and the sale of investment publications. We expect a reasonable financial return that will enable us to continually expand our services.

While the structure and purpose of AIS is distinct from that of AIER, the entities share a common commitment: the research of both entities is anchored firmly in the science of economics. Like the money managers we compete with, AIS conducts and finances its own research; it is not, and cannot be provided to us by AIER. Our adherence to a scientific method, coupled with our need to compete amidst constant capital market innovation, led us to embrace the tenets of modern portfolio theory. The unique combination of discipline inherent in science and the need to innovate necessitated by our business competition prompted the AIS staff to recognize that certain groups of securities constituted distinct asset classes. Since the late 1990s AIS has recommended small cap, large cap value, large cap growth stocks, REITs, and foreign developed and emerging market stocks. Our simultaneous (and ongoing) review of hundreds of investment vehicles led us to make the specific recommendations which have proven so successful for our clients and readers.

AIER and its supporters have enjoyed substantial direct and indirect benefits from AIS’s research efforts. AIER has expanded upon these findings to publish its own widely-sold book, How to Invest Wisely. AIER is also a client of AIS and as a result of our recommendations has enjoyed extraordinary growth in their charitable remainder program assets held in trust. AIER has also prospered financially through its ownership of AIS since we embraced asset class investing. Our assets under management, which stood at only $210 million just five years ago, now exceed $450 million, while the number individual and institutional clients we serve has risen from 160 to 260. Finally, through its ownership of AIS, AIER (unlike other “think tanks” devoted to social science research) can claim ownership of an entity that actually employs the results of scientific inquiry.

Also In This Issue

A Look Inside The HYD Model
New Recommendation: Tax Exempt Bonds
A Reader Inquires: Geometric Average Market Cap
The High-Yield Down Investment Strategy
Recent Market Statistics
The Dow Jones Industrials Ranked By Yield
Recommended Investment Vehicles