The new millennium has not been kind to investors. After a long run in the 1990s, the bull market finally ran its course, and for the past two years, stock portfolios have been declining. In fact, by the end of 2001, economic data confirmed a recession had begun in March of last year. As we head into the fourth quarter of 2002, optimists think the bottom has been reached and a recovery is on the way. But only time will tell.

Meanwhile, as double-digit returns have been replaced by double-digit losses, many investors have retreated to the sidelines. Lower fund performance is now matched by lower fund inflows. In fact, equity funds had a record outflow of $29.5 billion in September before recovering in the final months of 2001. Still, net new cash flow to equity funds for 2001 was only $32 billion, versus $309 billion for 2000. Better times are in the offing, if not just around the corner.

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