June 29, 2001

We apply our Selector Methodology to BARRA value and growth indices to estimate the likelihood of value stocks in the S&P 1500 outperforming growth stocks in the S&P 1500 and vice versa. The table below reports the estimated probabilities for the last four quarters, the current quarter and the next three quarters. The passage of the budget resolution at the beginning of the second quarter assured the passage of the Bush tax package. Growth stocks surged 20% in response to the improved economic environment. The defection of Jeffords brought that to a halt and the growth stocks gave back about two thirds of the previous quarterly gains. However, the recent fed funds rate cuts have added new life to the growth stocks.

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