1st Quarter 2002  Newsletter
After last year’s recession, bear market & fourth quarter rebound, capital markets proceeded with caution during the first quarter of 2002.
Market results were mixed, with the Dow Jones Industrial Average rising 3.80% , the S&P500 Index increasing 0.28%  and the Nasdaq
Composite falling - 5.40%
1 for the quarter. Smaller stocks generally out-performed larger stocks, and Value generally out-performed
Growth.
2


































The year began with Enron’s collapse and the ensuing accounting scandal that spread throughout equity and fixed income markets as
investors questioned the quality and transparency of corporate earnings. Investors continue to be skeptical of promised future profits, with
markets remaining tepid in recent weeks despite mounting evidence of economic recovery. Strong rises in consumer confidence, home
sales, and manufacturing suggest that economic conditions are improving, perhaps more quickly and robustly than initially expected.
3


Despite numerous indicators of economic strength, some risk of additional retrenchment remains. Corporate profits and capital
expenditures will need to visibly firm for the economy to fully regain its footing in expansion. Further, as the rate of growth increases so too
does the risk of
inflation - Greenspan’s cautious but optimistic remarks tempered market performance in March as investors worried that
interest rates might begin rising sooner rather than later.

Although uncertainty and risk remain an inherent part of investing, market sentiment has calmed considerably from the tumultuous days of
2001. Patient, steadfast investors have been rewarded, with the Dow Jones Industrial up 26% from its September 21st low, and the Nasdaq
up nearly 30% over the same period.
5  As always, we recommend adhering to long-term investment objectives and a disciplined investment
strategy, and welcome the opportunity to review with you your portfolio and financial goals.

Regards,



Robert Valentine




Endnotes:

1  Wall Street Journal, April 1, 2002
2  Standard & Poor’s Index Services, Frank Russell, CRA RogersCasey
3  Wall Street Journal, April 1, 2002
4  Wall Street Journal, March 4, 2002
5  Wall Street Journal, April 1, 2002
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