Investment Perspectives Update -- August, 2002

Finally! After nearly 2½ years, I have the sense that one of the most serious bear markets of the last 100 years is grinding to a close. The ultimate bottom could still be ahead of us, but the brutal decline from mid-May to July 23 should mark the final major downward thrust. I expect there to be some additional sharp dips before this is all over, but they should endure for hours or days, not weeks or months, and be interspersed with equally strong rallies.

The primary issue continues to be the economy, which, following a recession in 2001, remains stubbornly sluggish. However, free enterprise is a powerful force and it will eventually relieve the "bubble hangover" I referred to last month. Secondarily, investor confidence should gradually be restored as corporations are forced to focus more sharply on financial accounting, reporting and integrity.

Let's hope I'm right.

Jeffrey L. Friedberg