BUSINESSWEEK ONLINE : MARCH 22, 1999 ISSUE
READERS REPORT

Why the Market Is Top-Heavy with Big Stocks


''Big caps, big edge'' (Finance, Mar. 1) did a great job explaining why large-cap stocks have performed so well. There is one reason for the difference between small caps and large caps that you failed to mention: The boom in initial public offerings has increased the supply of small-caps while megamergers have decreased the supply of large-caps. Both phenomena are indicative of the low nominal growth environment that characterizes today's economy. Our surveys of industry suggest that weak pricing power renders economies of scale increasingly important.

Jason R. Trennert
International Strategy & Investment Group Inc.
New York


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