“After the disastrous events of September 11, we were correct in our assessment that stocks were deeply oversold, generally undervalued, and that the widespread fear and bearish sentiment presented an attractive buying opportunity. So, while many investors were selling stocks and stock mutual funds at a record pace, we were…increasing our stock exposure. Once, again we were rewarded by not ‘following the crowd’.…we are less excited about potential future stock returns after the strong fourth quarter rally. Stocks in general are now overvalued, while investor sentiment has returned to bullish levels that have usually preceded intermediate-term declines…In fact, in recent weeks we have lowered our stock market exposure across all of our accounts…We would not be surprised to see the major market averages decline for a third year in a row.”
– ACM Quarterly Commentary, January 24, 2002
THE S&P 500 RALLIED 19.3% FROM ITS SEPTEMBER LOWS THROUGH THE END OF 2001. HOWEVER,THE MARKET FELL FOR THE THIRD CONSECUTIVE YEAR IN 2002, LOSING 22.1% IN ONE OF THE WORST CALENDAR YEARS FOR STOCK INVESTORS IN MODERN MARKET HISTORY.