DON’T FEAR THE BEARWhen share prices begin falling dramatically, it can appear that your only option is to sell in order to limit losses.We disagree. As a long-term investor, the difference between success and failure may be determined by youractions during a stock market decline.

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No one can predict a bear market, but we believeremaining focused on your investment strategy is thebest way to weather one. It’s called a bear marketbecause it resembles a bear’s attack — rearing up onits hind legs and swiping its paws downward. A bearmarket is a sharp, prolonged decline in share prices,usually 20% or more, almost always triggered byunexpected events or economic conditions. As a result,investors can frequently be caught off guard andbecome susceptible to the anxiety caused by thereports of gloom and uncertainty.

It’s unlikely that you will ever meet a real bear face toface. However, if you’re a long-term investor, it’s almosta certainty that you will experience a bear market. Ouradvice is this: Stock market declines are normal, happenfrequently and are not a reason to sell quality investments.

Our advice for surviving a bear market is almost identicalto survivalist Peter Kummerfeldt’s advice if you comeface to face with a real bear:

‘When faced with a real bear, keep a cool head. Try tostay calm. Do not yell, scream, kick or fight. Don’t panic.Make no sudden moves. Stand your ground. Never try to outrun a bear; it will only make matters worse. Theinjuries that occur are more a function of what the humandoes to resist than what the bear is capable of doing.’

Keep a Cool Head. Try to Stay Calm.Bear markets are usually quite frightening. The stockmarket decline can be dramatic. It almost seems likethere is no end in sight and you’ll hear many predictionsabout how much lower shares could go.

In every bear market, the rebound has been unexpectedand has started when the outlook appeared bleak. Inbear markets, investors should keep a cool head and a steady hand and try not to be swayed by extreme predictions of doom and gloom.

Make No Sudden Moves. Stand Your Ground.You should never jump into or jump out of the stockmarket. We believe it’s almost always a bad idea tomake a long-term investment decision in reaction toshort-term market fluctuation. If your portfolio containsquality investments that are well-diversified, our bestadvice is to stay the course during market declines.

During and immediately after market declines, thetemptation almost always exists to sell quality share and bond investments, and change your strategy.Commodities, investments proclaiming to hedge market risk, property and other alternatives oftenbecome popular after a poor stock market performance.

Rather than chasing the best performing investments,stay committed to your long-term strategy. Althoughpast performance is not an indication of future results,over the long term an investment in the stock markethas historically performed well. However, investorswho try to predict when to get into and out of sharescan pay a severe penalty for not being fully investedwhen the market is rising.

DECLINES IN THE UK STOCK MARKET1948 – 2008

Dip Correction Bear5% of More 10% or More 20% or More

Number 52 21 11

Per Year About 1 1 every 1 every3 years 5.5 years

Source: Ned Davis Research, 02/01/1948 to 31/12/2008.Past performance is not a guarantee of future results. The UK Stock Market is representedby the MSCI United Kingdom Index. The MSCI United Kingdom Index is an unmanagedindex and cannot be invested into directly.

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Edward Jones Limited is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange. Registered in England and Wales No. 3403976. 11 Westferry Circus, Canary Wharf, London, E14 4HH.

Missing just 50 days with the highest returns since1968 would have wiped out all of your gains. Evenmissing the best 10 days over 40 years would havereduced the annual gain from an investment in theFTSE All-Share from 6.6% to just 4.5%.

Many also will argue that if you had missed just ahandful of the worst days, returns would have been better. This is true, but predicting the worst days can be even more difficult than predicting the best ones.Many times the best days actually immediately follow the worst ones.

Either way, you’re trying to time the market, and it’salmost impossible to do that consistently. Instead, we think staying invested throughout market ups anddowns is a better way for you to help achieve yourlong-term goals.

How the Bear Can Help YouBear markets provide long-term investors with theopportunity to buy quality investments at a discount.The price you pay for an investment matters. Why?Generally, the lower the price you pay for a qualityinvestment, the higher your potential investmentreturn during the long term. This advice also holdstrue for market dips and corrections.

Here’s one way to think about unsettling markets:Market declines return investments to their rightful owners — those who understand what they own, and why they own it. Although some market declines can be painfully long, the vast majority of bear markets are relatively short — around 16 months on average. This is compared to the average bull market, which lasts four-and-a-half years.* Remember, bear markets tendto recover just as abruptly as they start.

Take Action to Survive the BearAgain, we believe your success as an investor maydepend on your actions during a market decline. Makean appointment with your Edward Jones financial adviser to develop a portfolio that can help you reachyour long-term goals through rising and falling markets.

Kate Warne, Ph.D., CFAMarket Strategist

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Days Excluded Average Annual Return*

0 6.6%10 4.520 3.130 1.840 0.750 – 0.260 – 1.170 – 1.980 – 2.790 – 3.4

100 – 4.1

MISSING THE BEST DAYSAnnual Return for an Investment in the FTSE All-Share

Source: Bloomberg, Edward Jones. FTSE All-Share Index, 31/12/1968 to 31/12/2008

*Dividends not included. Past performance is not a guarantee of future results. The FTSEAll-Share is an unmanaged index and cannot be invested into directly.

* Ned Davis