American Investment Services, Inc.

Disciplined, Diversified, & Cost Effective

Mar. 2002 – Six Months Later

The table below is an update to the table we published immediately following the attacks on the World Trade Center and the Pentagon.

The stock market has bounced back sharply, as it often has following dramatic events in history, but this is hardly a signal to “buy on bad news.” The fact is, stock price changes are driven by news, which by definition comes randomly. Investors hoping to profit by outguessing the market will be disappointed.

Most investors who follow our investment approach would have owned common stocks prior to September 11, and would not have altered their portfolios in response. Rather than speculating about prospects for further disruption, disciplined investors will instead focus on maintaining an asset allocation appropriate to their tolerance for risk.

Rather than focusing on spectacular events, our approach is to examine long-term empirical evidence to help develop sound portfolios. For example, we know that historically certain asset classes have provided strong returns, and that several are not strongly correlated, and therefore merit a place in many portfolios. We also know that since the gold standard was abandoned, monetary inflating and the loss of purchasing power of the dollar and other fiat currencies has been dramatic, as demonstrated in the chart. There is little to suggest that the future holds hope for anything different.

The almost certain prospect of monetary inflating underlies the inclusion of common stocks, gold and REITs in our recommendations. These are time tested inflation hedges and therefore remain invaluable for most investors, regardless of the many disruptions that might occur over their planning horizon.

Also in This Issue:

Using Credit Cards Wisely
Tax Relief Act: Proceed with Caution
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield