(MONEY Magazine) – How would you like to be a highly intelligent, experienced, skilled professional--and come in to work every day and have somebody tell you that you're a moron?

In late January, a shareholder sent an e-mail to the Oakmark Fund, which as recently as April 1997 had the finest five-year record of any diversified U.S. stock fund. It read, in part, "Who the f--- is the fund manager and why can't he get his head out of his a--? A f---ing monkey could put together a better portfolio than you."

Portfolio manager Robert Sanborn's response to such sentiments? "It really doesn't bother me," he says, then adds with disarming bluntness: "I may be an idiot, but I'm the largest individual shareholder in my fund. My incentives are aligned with yours, and you can go along for the ride or not." (A lot of people are disembarking: Sanborn's fund has shrunk by $3 billion in the past year, and he says investors have withdrawn money every single day for the past nine months.)

Even when managers aren't getting angry mail, the stock market has been relentlessly rendering its verdict. While Standard & Poor's 500-stock index has shot up nearly 80% since the beginning of 1997, many value funds have barely broken even.

In late April, value stocks suddenly began leading the market--at least temporarily--as tech stocks fell to earth. But instead of celebrating what could be the end of their underperformance, many of the value managers on the MONEY 100 are still shaking off the investing equivalent of post-traumatic stress syndrome. "It's been depressing as hell sometimes," says David Dreman of Kemper-Dreman High Return Equity, whose fund lagged the S&P by more than 16 percentage points last year and by another eight points in the first quarter of 1999.

Every value-oriented manager I spoke with insists that the approach of carefully analyzing a company's assets and future earnings, and refusing to pay too much for them, remains valid. Stuart Teach, co-manager of Homestead Value, which ate 20 points' worth of the market's dust last year, asks, "Am I a dinosaur?" He hesitates for a fraction of a second, then answers, "I don't think so."

But over the past year or two, the market has mainly favored two kinds of stocks: giant growth companies like GE and Microsoft, trading at high prices relative to their earnings, and young technology stocks like AOL, Amazon, At Home and Yahoo!, some of which have no earnings at all. With growth and tech stocks in the lead, last year half of the 28% return of the S&P 500 came from just 15 stocks. "We owned a grand total of one of them: Ford," says David Schafer, whose Strong Schafer Value trailed the S&P by a disastrous 35 percentage points last year and another 18 points in this year's first quarter. "We couldn't have owned the other 14 if we wanted to. We have to have a P/E that's lower than the market's and earnings growth prospects that are better than the market's. We'll never own a company that's priced like Microsoft."

It seems to me there are only two possibilities: This really is a "new era," in which the price of a stock will never again matter and value funds will never recover. Or it's not a new era after all, in which case value funds will eventually come back and overpriced stocks will be revealed for the risky gambles they really are.

To those who believe in a new era, it doesn't matter how confidently these fund managers insist that value will come back--it won't and it never will. By refusing to add growth stocks to their portfolios, say the new-era advocates, value managers have doomed their investors to permanent underperformance--and they have no one to blame but themselves. As the Russian proverb has it, "If you're standing on your head, don't complain that the world is upside-down."

And shouldn't value managers at least concede the theoretical possibility that the new-era folks are right? After all, back in 1958, when the dividend yield on stocks dropped below the yield on bonds, Wall Street's graybeards made fun of the whippersnappers who proclaimed a new era. No way, said the solons; such an unnatural relationship between stock and bond yields could not last. Here we are 41 years later, and stocks still yield less than bonds.

I cornered David Dreman on this point. "Okay, the probability that this really is a new era is not zero," he says. "But I would say that it's about as probable as my jumping out of an airplane at 20,000 feet without a parachute and surviving."

In the end, I agree with Dreman. Ultimately, stocks are like socks, tires, bread, paint or anything else we need: There has to be some price beyond which they become too costly to be worth buying. "If other people are willing to do stupid things to make more money temporarily, so be it," says Mason Hawkins of Longleaf Partners. "We're trying to determine long-term values." To give up on fund managers who invest your money on this principle--especially at a time like this--would be a big mistake.

--Jason Zweig