February 16, 2001

We believe higher volatility is in part the result of the overall favorable economic climate combined with the technological revolution taking place in America. We've argued that the reduction in inflation and lower inflation expectations has led to lower interest rates, thereby lowering investors' discount rates and hence a longer investment horizon. The ensuing price stability has also acted to lengthen investors' horizons. The increased certainty of real economic profit forecasts again has increased the weighting of future economic profits.

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