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Market Update

Last Year's Dogs Have Their Day in 2000

Philip Morris, Fannie Mae, Freddie Mac, and others fuel value rally.

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Investors called value equity funds in from the woodshed for the first time in about three years in 2000. In 1998 and 1999, offerings that prefer the shares of big, quickly growing, and premium-priced companies posted heroic gains, leaving more-conservative, price-conscious vehicles in their dust. 

It was a trying time for value investors as they watched professional and individual investors shun profitable but slower-growing companies for the immediate gratification of profitless, but soaring Internet and technology stocks. The growth- and tech-stock craze that pushed the Nasdaq Composite index to unprecedented heights earlier this year vexed value partisans. Hedge-fund manager Julian Robertson quit, grumbling he didn't want to invest in a market he didn't understand, and stock-picker Robert Sanborn's uncompromising devotion to unloved stocks cost him his job running Oakmark Fund (OAKMX) for Harris Associates. 

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.