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Ammo For The New Year


Editor's Memo

Ammo for the New Year

It was December, 1972, and Richard Nixon had just defeated George McGovern in a landslide. The Dow Jones Industrial Average had just closed above 1000 for the first time ever--the financial equivalent of running the four-minute mile. In that heady climate, BUSINESS WEEK created its first yearend investment outlook issue.

It turned out to be a rough passage for both Nixon and the investor. But even so, our traditional issue has thrived during the intervening 28 years. Since 1972, we have given investors the ammo they needed to meet the markets' challenges--from the oil shocks and stagflation of the 1970s to the Reagan-era tax cuts and takeovers of the 1980s. Following the stock market crash of 1987, BUSINESS WEEK argued that the long-term case for stocks remained strong. From "Investing in the New Economy" (1996) to "The Global Slowdown: What It Means to You" (1997), the investment outlook issue continues to be forward-looking. A year ago, in the midst of the dot-com boom, we made the case that the real story of Internet investing would be how traditional companies would use technology and the Web to increase their efficiency and transform their businesses. This year, we focus on "Winning Strategies for a Tougher Market."NEW VIGOR. We start by looking at the overall economic framework, including a survey of the nation's leading business economists. Their consensus forecast for 2000 failed to show how strong growth would be--and it also underestimated inflation. But we're happy to report that BUSINESS WEEK's own prediction, prepared by Business Outlook columnists James C. Cooper and Kathleen Madigan, ranked No. 5 out of the 50 economists surveyed.

For years, Wall Street market strategists have underestimated the bull market's vigor. Last December was an exception, as the market gurus surveyed by BUSINESS WEEK turned out to be far too optimistic for 2000. Nevertheless, they're forecasting an up market this year, too. But right or wrong, their views on asset allocation, together with their favorite stock sectors and stocks, provide investors with perspective from the Street.

Individual investors, as tracked since 1996 by the BUSINESS WEEK/Harris investor poll, have tended to be more favorable in their outlook than the professional market forecasters. Cumulatively, the poll provides valuable background on how that sentiment has changed. This year, for example, investors are more pessimistic about the market than they have been in five years. But they continue to be upbeat about their own ability to beat the market. Good luck, folks.

BW's annual Investment Scoreboard of 900 companies wraps up the issue, providing a wealth of information for the individual investor. Readers can analyze companies historically and evaluate their prospects several different ways, and it's a great starting point for further research.

"Where to Invest" is a collaborative effort of two dozen reporters and editors drawn from our finance, investor, and economics departments and using the resources of our vast bureau system around the world. Chief Economist William Wolman leads our team, along with Senior Editors Jeffrey M. Laderman, John Templeman, and Seymour Zucker.

This special double issue is our way of wishing you a happy and healthy New Year--and a prosperous one, too.By Stephen B. Shepard, Editor-In-Chief


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