The bear market officially crossed the 3 year mark from its peak in March 2003. (A distinction/anniversary we would prefer not to celebrate.) To the average investor it feels more like 30 years with no end in sight. 'Will we ever make money again?' is the common rallying cry of the investment masses. In many areas, you can no more find interest in stock buying than you could find interest in your Bulls tickets.

As we are only too aware at this point, the market receded for the better part of 2003's first quarter on the lingering war rhetoric regarding Iraq. The very serious global debate on war with Iraq was longer and more politically sensitive than many first believed. The lengthy politicizing of war with Iraq caused a Chinese water torture like sell-off from mid January through the early March.

As the prospects of a war seemed imminent with President Bush's 72 hour ultimatum, the markets rallied. Beginning March 11 and ending March 31, the S&P 500 rallied 5.93% while the Russell and EAFE indexes were up 5.05% and 4.55%, respectively. We had spoke of this scenario in the last newsletter; a sell-off followed by the typical war rally.

The quarter was marked by significant volatility. For example, the S& P 500 began the year with a 2 week run up of 5.5%. This was followed by a 2 month downturn of -14% (war rhetoric begins in earnest). And the quarter finally culminating with a 3 week reversal restoring almost 6% to the S&P 500's value.

Mortgage loan officers continued to remain busy in 2003 as lending rates remained at 40 year lows. The interest rate environment continues to benefit consumers in their housing, auto and other financed purchases. For investors, the historically low interest rates mean less income. The Prime Rate which peaked at 9.50% in January 2001 remains at 4.25%, providing less than half the income of three years ago. High yield investors enjoyed the benefit of appreciating high yield bond prices. The total returns for many high yield bond funds approached 7% for the first three months of 2003.

Consumption appeared to be slowing on war concerns, consumer fears of continued recessionary pressures and the fact that so much has been purchased in the last 2 � years on interest rate incentives. It is unlikely that somebody doesn't know someone who has been without work for some period of time. Even if you are employed, most employers are freezing or reducing wages, reducing benefits and slashing expenses. The cost of insurance, whether it be health or property and casualty has increased 40% to 80% over the last three years. Oil prices spiked to nearly $40 a barrel on war concerns, significantly raising the price of gas and the production cost in many manufacturing industries.

As we write this on April 10, 2003 the Iraq War has completed 22 days. Yesterday, the military coalition rolled into the center of Baghdad giving the appearance they are securing the city. This move into Baghdad appears to have begun removing the fear that the Iraqi population was smothered with by the Hussein regime. The citizens of Baghdad have begun to show public opposition to the Hussein regime and are reveling in the imminent military victory of the coalition forces. Though fighting persists, the resistance appears scattered, leaderless and technologically inadequate.

Last quarter we mentioned that a successful military action would be positive for the markets. The markets rallied on their belief this outcome was inevitable. With what now appears to be a coalition victory, the markets have actually sold off slightly and remained flat for the last two days. We also believed this scenario would happen. With the military conflict resolution in sight, the market's focus now turns to the economics of the Middle East, the US and the Globe. At present, the outlook for the World economies is much cloudier than the war in Iraq.

And as it regards the quote at the beginning of this column, yes this period shall pass too. There have been a lot of households retire successfully in the last thirty years! Investors who have strategically planned, diversified and prudently invested for retirement will enjoy the fruits of their labor.