04/09/2007

That's so Growth!

Hello:

It appears that Value investments are beginning to be outmaneuvered by Growth investments. After approximately seven years of Value investments holding pole position (ICM publications), Growth investments are leaving them in the dust. In a rough comparison of Large Cap Value (Russell 1000 Value Index) vs. Large Cap Growth (Russell 1000 Growth Index) it appears that Growth has outdistanced Value by approximately 3/4% so far this year.

What could this mean? It could mean that investors are looking for companies that will become more profitable because they have something more to offer, not because of how the overall economy is behaving. It could mean that the economy is expected to grow at a slower pace in the near future. That fits with our interest rate working hypothesis of flat interest rates for now and perhaps lower interest rates next year. (Translation: We would be very surprised if mortgage rates went up).

Tomorrow, Alcoa Inc. leads the earnings reports parade. We cautiously anticipate modest growth for the first quarter of this year.

Spring is a great time for a fresh start. Do you have your written policy for gift receiving in place? If not, contact us for further information.

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager