The increase in the price of fuel dampened growth in 2000. The result was extreme, as this took place during the employment of a restrictive monetary policy. Inventories, which had built up during the second half of 2000, are flushed out at attractive prices to the consumer, further pushing the adoption of technology. This phenomenon happens every few years and is natural. The best quality companies in the technology and consumer cyclical sectors should return to growth and profitability.
Valuations are very favorable.
The Value Line Index 4 of 1,600 equally weighted companies is currently at the same level it was in 1986. This is despite the company's position at the advent of a new and promising product cycle. The most important factor is the accommodative Federal Reserve. Rate cuts have historically been one of the most consistently bullish signals. Growth stocks tend to perform well when the Fed is easing.