He added that sometime after the exceptional year, the Oakmark Select Fund might turn into a full-time job, but that they could cross that bridge when they got to it. He couldn't have known that in the Fund's first full year its net asset value would be up 55% and the Fund would have gathered over $1 billion in assets.

    Less impressive, however, have been Nygren's predictive powers. He's yet to have his first mediocre year. And Oakmark Select Fund has significantly outperformed its mid-cap value fund peers in 1998, 1999 and year to date - more than doubling their compound annual return (before and) since.

    Impressive though that might be, as long-time subscribers know, we rarely take such short track records very seriously. But once we heard some of what Nygren had to say at Morningstar's conference earlier this year, we decided that it was time to make an exception and see if he would be willing to share some of his insights with you.

    What follows is, first, excerpts from his comments at the Morningstar Conference followed by excerpts from a series of conversations with Nygren and the Oakmark Select Fund co-manager Henry Berghoef which took place between mid-October and shortly before we went to press.

    We weren't disappointed - and we don't believe that you will be either. Needless to say, we don't believe that Nygren (or Berghoef) are any kind of four-year wonders. We highly recommend that you read what they had to say and hope you find it as valuable as we do.

OID: So-called momentum investing's become the rage.
    Nygren: That's right. And the flipside of that has also been true: funds and stocks that have underperformed have become less attractive to investors. Well, that's very counter-intuitive to those of us who focus on fundamentals in our stock selection.

OID: Although that's the way human beings are wired. But I guess you're saying it's a matter of degree.
    Nygren: Exactly. And it's self-reinforcing. We've been through a period where price momentum has led to further positive price momentum - hopefully peaking out this past March.

OID: Yeah. At least four contributors have observed that the valuation extremes reached this year were the greatest that they've ever seen.
    Nygren: They were the most extreme they've ever seen because they were the most extreme that they've ever been. Someone prepared a chart showing the relationship of the P/E ratios of the 50 stocks that have performed the best in the S&P 500 relative to the P/E ratios of the other 450 for 30 or 50 years - some very long-term time period. And as you might expect, there was a normal range in which that figure bounced around for most of that time. But in the last three years, it skyrocketed off to the top of the chart.

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