Market Commentary | 1Q 2000

Irrational Exuberance in the U.S. Equity Market

The Rise and Fall (and Rise and Fall and Rise and Fall . . . ) of Puma Technology

Executive Summary

There were victims to the atmosphere of irrational exuberance. As technology stocks continued their dizzying ascent, the pressure on value managers intensified. The first quarter was brutal for investors who paid attention to things like company fundamentals, price earnings ratios, book value, dividend yields, indeed, any of the basic yardsticks that have been used historically to provide a measure of value. All an investor needed to invest profitably in the first quarter was optimism.

The first part of 2000 has been remarkable in that some of the country’s – no, the world’s – most prominent value investors threw in the towel. Value managers are fast becoming a rare species. We are fortunate in that our independence as an investment firm allows us to speak candidly about our views of the market, and to invest in strategies that we believe will best lead to profitable long-term investing for our clients. While in the short term, we may lose the beauty contest, our ability to resist the pressure to conform will ultimately accrue to the benefit of our clients.

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