Staying on Top of a Changing Market

While the stock market may have already discounted uncertainty about Iraq, broad changes are taking place that may keep volatility high--and individual investors cautious--for years to come. As Associate Editors David Henry and Marcia Vickers report in this week's issue, buy-and-hold investing is giving way to no-holds-barred trading by market professionals who thrive on turmoil. Earnings surprises and the ongoing corporate crackdown will only add to the whipsawing.

A year ago, in "The betrayed investor" (Feb. 25, 2002), we wrote of the disillusionment of the investor class in the wake of Enron, Global Crossing, and accounting improprieties at company after company. "How corrupt is Wall Street?" (May 13) chronicled the consolidation of investment banking, brokerage, lending, and research under one roof and how the ensuing conflicts of interest caused Wall Street to value investment banking deals more than the investors it also purportedly served. The story explained in detail the way that Wall Street analysts are compensated and the unrelenting pressure for analysts to put "buy" recommendations on stocks. "The angry market" (July 29) posited that the repricing of stocks reflected a more honest picture of corporate earnings, stock options, and the future.

Now, heading into the fourth year of a bear market, Wall Street is becoming an even more volatile place, with "mini-bear" and "mini-bull" swings the order of the day. For individual investors, asset-allocation and diversification strategies for investments that do not move in lockstep with the stock market are more important than ever.

From our front-of-the-book News: Analysis & Commentary and International Business sections to Finance and BusinessWeek Investor in the back of the magazine, you can count on BusinessWeek to provide the best analysis of Wall Street and the financial markets from every angle, week after week.

By Stephen B. Shepard, Editor-in-Chief

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