Investment Recap Third Quarter 2000

We have long advanced the view that markets and economic developments are experiencing a “time compression of events.” (Things seem to be happening at a more and more rapid pace.) The most vivid example of this phenomenon, of course, is technology. Less than a year ago this was the only sector that was going up and investors were clamoring for higher technology weightings in their portfolio. Now it is technology that is dragging everything else down and the broadening of the market which we have been commenting on is occurring. We have sought diversification by overweighting energy and increasing healthcare and financial sectors. Also, we have held some reserves in cash or bonds depending on the account guidelines. Valuations are beginning to look more and more attractive on a host of companies. The economy is definitely slowing down and it is having an impact on corporate earnings. The pendulum always swings too far between greed and fear and the negativity of the past few days is setting up a precondition for a sustained rally before year-end.