American Investment Services, Inc.

Disciplined, Diversified, & Cost Effective

October 2008 – Bear Markets: The Long View

The current bear market is one of the most severe on record. Before reviewing the recent performance of our recommended asset classes, however, we encourage readers to consider the chart on page 74 which puts the current market in historical perspective.

The rising trend lines designate the bull market periods occurring since 1965. The falling trend lines document bear market periods. The rectangles that frame the trend lines help to describe the length and intensity of the gains and losses. Data in the chart ends as of July 31, 2008 (Update: since the beginning of the current bear market October 9, 2007 through October 17, 2008 the S&P 500 is down by 39.5 percent).

Fluctuating performance during each period demonstrates high volatility even within established market cycles. While bull markets may have short-term dips, and bear markets may have short-term advances, the overall trend may not be readily apparent. This illustrates the difficulty of accurately timing market cycles.

Since 1965, bull market periods in the S&P 500 Index have, on average, lasted significantly longer than bear market periods. In addition, bull market periods have delivered price gains that are disproportionately greater than the bear market losses. These data support the case for maintaining a disciplined, long-term investment approach.

Also in This Issue:

Quarterly Review of Investment Policy
Retirement Plans for Business Owners
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield
Asset Class Investment Vehicles