(FORTUNE Magazine) – MONEY & MARKETS/Cover Story

18 The Battle Over Stock Market Reform A profound change in investor psychology caused Black Monday. More regulation won't prevent its repetition. by Robert E. Norton

20 Tales of the Brady Bunch

22 Specialists: Special at What?

28 The Best and Worst Stocks of 1987 Even with the bear on the loose, there were still a few profitable places to hide. by Julianne Slovak

34 Deals of the Year It took a stock market debacle to slow the pace of U.S. dealmakers. Busiest were investment firms in the takeover trade. by William E. Sheeline

THE ECONOMY

45 Fortune Forecast: A Rousing Start for the New Year Consumers survived the crash in pretty good spirits. The dollar looks more secure. by Vivian Brownstein

TECHNOLOGY

48 The Good News About U.S. R&D It's still No. 1, though maintaining the edge over Japan and Germany will be costly. by Stuart Gannes

Where Research Gets Done:

50 Woods Hole Oceanographic Institution

52 California Institute of Technology

54 Los Alamos National Laboratory

60 The New Look at America's Top Lab How has Bell Labs weathered the breakup of AT&T? Answer: surprisingly well. by Gene Bylinsky

SELLING

68 Wooing Aging Baby-Boomers Consumers 35 to 44 will soon be America's biggest spenders, so advertisers must learn to appeal to this over-the-thrill crowd. by Faye Rice

CORPORATE PERFORMANCE

79 Companies to Watch

LOOKING AHEAD

81 Europe Gets Ready for 1992 After 30 years of dithering, the Common Market is driving to live up to its name. by Shawn Tully

SPECIAL REPORT

86 How to Smarten Up the Schools Business leaders fear that undereducated new workers will sink the American economy. by Myron Magnet

4 The Editor's Desk

8 News/Trends Sanity at last on Third World debt, homes' sweet sales, the case for buying citizenship, an inch worth of real estate, corporate mascots make a comeback, and more.

16 Letters to Fortune

97 Fortune People Harvey Myerson's new dancing partner, John Castle's latest deal, the breeder of the year sells his horses, and more. by Nancy J. Perry

98 On the Rise

99 Personal Investing Playing it safe with convertible bonds. by John J. Curran

Even with the economy slowing, McDonald's is able to keep its profits sizzling. Most commodity funds did well last year; one did extremely well with a mind- blowing 195% appreciation.

Portfolio Talk: Fund manager Michael Price of the Mutual Shares fund.

105 Keeping Up A $13,458 win at the races proves the efficient market hypothesis, the feds forestall nudity, space baby talk, and other matters. by Daniel Seligman

108 Books & Ideas William Greider's reportorial coup on the Fed. by Daniel Seligman

Cover: Nicholas Brady, chairman of the presidential task force to examine October's stock market crash, photographed by Rob Kinmonth.