'So Sorry'

Every quarter has offered the chance for another mea culpa. In April, they wrote, "as we have said -- possibly ad nauseam -- we and our shareholders may have to be unusually patient." In July, they conceded that "our stock market fund results have been poor." In September, they said: "The credit crisis . . . turned very ugly in the third quarter. Then it got worse in October."

In an interview, Hinton said, "It's been kind of a long year for everyone." He said he believed investors were "pleased with level of detail we provide, the candor that [his co-manager Weitz] provides. It doesn't mean they're happy. No one's pleased with the recent results. We certainly aren't, either."

Other than gold and Treasury bonds, perhaps the only bull market around is the market for code words. "With the benefit of hindsight, we have obviously been wrong to be as constructive on the market as we have been," David E. Nelson, chairman of the investment policy committee of Legg Mason Capital Management, wrote in early October, delicately substituting the word "constructive" for optimistic.

Many managers concede mistakes succinctly. Davis and Kenneth C. Feinberg, co-managers of the Clipper Fund, said frankly that their fund's performance was "poor both on a relative and absolute basis."

One purpose of the letters to customers is to hang onto customers. So investment managers and strategists from Weitz Funds, the Clipper Fund and Legg Mason all pointed to Warren E. Buffett as an example of patient investing.

Hinton said, "Warren Buffett is without peer in the investing world." Hinton added, "And a lot of the common sense that he's been preaching for years was probably never more true than at a time like this." The fund's biggest holding is now Buffett's Berkshire Hathaway.

Clipper and Legg Mason strategists both compared buying stocks today to a sale in a retail store, with both funds' managers noting that people rush to Macy's during a sale but stay away from the stock market during downturns.

In times like this, there is a run on platitudes. "It is often said that investing is simple but not easy," write Davis and Feinberg. They also say, "As the old saying goes, only liars buy at the bottom and sell at the top."

Optimism dies slowly. In a report sent recently, Fidelity Dividend Growth manager Charles Mangum, who confessed to erring by having a large stake in AIG among other losers, said "I remain bullish on the United States. We're an unusual country." Just below his discussion of performance, Fidelity added a note saying that a new manager took over the fund on Sept. 9.

Fidelity spokesman Adam Banker said the appointment of Mangum's successor, Lawrence Rakers, "is in the interest of the shareholders of the fund and will position the fund to attain strong long-term performance." Banker said Rakers had "a successful, long-term track record." He added that Fidelity was working with Mangum to "identify potential other opportunities within the firm." Mangum joined Fidelity in 1990 as an equity research analyst.

This year's performance tarnished a good run for Mangum, whose Dividend Growth fund edged out the S&P 500's average annual total return by 7.2 to 6.52 percent since he took over in January 1997 through June 30.

In his Oct. 6 note to investors, Citigroup's Levkovich cut his year-end forecast for the S&P 500 to 1200, 19 percent lower than his earlier year-end forecast but one that would still require a huge rebound from the current level of 968.

"It's looks pretty nutty -- no make that aggressive -- at the moment," Levkovich said in an interview late last month. "It certainly looks aggressive. But we could also be at the verge of a pretty powerful rally."

Legg Mason's Nelson was also feeling optimistic early last month. "As humbly as we can, we state that we believe investors are now being afforded one of the best buying opportunities of their lifetimes," he wrote. "If we are wrong about that, we will have yet another reason to apologize."

Steven Mufson has an investment in Legg Mason Value fund.