Dear Fellow Investor, Recently two professors from the University of Chicago, Eugene Fama and Ken French, published a study demonstrating the difference in long term returns of value and growth stocks. The study encompassed almost all stocks on every major US exchange. This celebrated study presented overwhelming evidence that market forces tend to overreact to past events, pricing growth stocks too high, and value stocks too low. Because of these reactions, as a group, growth stocks produce below average returns for investors who purchase them at high prices, and value stocks produce above average returns for investors who purchase them at depressed prices. The professors used book to market value to correlate the long term returns. Value stocks having high book to market value and Growth stocks identified by a low book to market value. On average the stocks fitting the value criteria had average annual returns of 21.4% while growth stocks had only 8% average annual returns. Factoring in inflation, the real long term rate of return for value stocks is a bit over 15% but only 2.5% for the growth group. Essentially the study is a good reminder that, when it comes to investing, what goes around comes around. Good companies can experience bad times and be unfairly priced. Apple, IBM, Coke, American Express, and many other excellent companies have experienced the wrath of an unforgiving market, and yet, they are companies with a proven ability to persist in the face of large challenges. Identifying value is simple. All you have to do is look for Good companies experiencing temporary difficulties. This simple strategy will, if you are willing to wait out the storm, reward you with hefty long term returns and lower risk (as the F&F study also showed). Stocks that meet the F&F criteria for value and have solid management in todays market include: Callaway Golf Ensco Corp Reebok Advanta Corp To learn more about the F&F study read Robert Haugen's book "The New Finance" available at http://www.5se.com/5se1.htm Regards, Jeffrey Minich 5se Investment Research New at the 5se site ********************** PortfolioPower! Portfolio Management Model versions for both Excel 95 & 97. Special Upgrade price, only $19.95, for PortfolioPower! Trial Users. Includes a special single-issue online preview of the latest 5se Wealth Building Report. Instant online credit card payment processing and PortfolioPower! order fulfillment with your American Express, Visa, Mastercard, Diners Club, or Discover card. http://www.5se.com/secretproduct.htm