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standards. In its year-end 1999 report, Mutual Beacon summed it up as follows:

During 1999, we stuck “to our longstanding value and special situation approach. . . .[We] bought only when we saw substantial upside with relatively little risk. In our opinion, risk still matters.

Investors were telling Eveillard that value investing was dead; “you’re obsolete,” and they withdrew huge sums. His one-sentence response was classic: “I would rather lose half my shareholders than lose half my shareholders’ money.”22

Old economy stocks were still cheap in 1999

Although tech, media and telecom stocks soared in 1999, it remained a deeply bifurcated market, one in which many “old economy”

stocks of traditional American companies could be bought at substantial discounts to intrinsic value. Indeed, though more stocks in the index were

down than up that year, the soaring prices of stocks such as Cisco, Oracle, Intel and Yahoo, carried the S&P 500 21% higher. (It’s not widely

understood, but because the S&P 500 is a dollar-weighted index, as a stock’s price rises, so too does its impact on the index.)

It might not have seemed a propitious time to buy any stocks; and Professor Robert Shiller, in his timely book, Irrational Exuberance,

thought that even value stocks would be too risky.23 For Graham-and-Dodders focusing on companies not markets, however, it was a time of great opportunity. The First Eagle Global presidents, sounding like a latter-day Graham and Dodd, said to investors in their report for the year ended March 31, 2000:

“For five years now, and particularly [the six months to mid-March 2000], smaller and medium-sized ‘value’ stocks have been neglected, ignored, and – in our opinion – mispriced by investors. . . throughout the world.” And while at the time it might have sounded like sour grapes to some, Longleaf Partners wrote to its investors that:

“The lackluster [performance, up 2.18% for 1999] should not overshadow the fact that


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