(FORTUNE Magazine) – MANAGING/COVER STORY 44 IS HERB KELLEHER AMERICA'S BEST CEO? Behind his clowning is a people-wise manager who wins where others can't. In an industry that has been losing billions, Southwest Airlines is rapidly expanding its low-priced, short-flight operations, powering ahead by means of fierce cost controls and high productivity owed to good labor relations: The bond of loyalty between employees and company may have vanished elsewhere in America, but it is stronger than ever here. by Kenneth Labich

INVESTING 56 THE HIGH-ANXIETY STOCK MARKET No matter what the Federal Reserve does next, the fall in stocks may not be over. Bargains are too few, and investors are growing skittish. Here's how to play the market today. by Susan E. Kuhn

55 CONFESSIONS OF A FEMALE COMMODITIES TRADER Like Hillary Rodham Clinton, FORTUNE financial writer Carol Loomis tempted fate when she was in her 30s by flirting with commodities. Unlike Hillary, she did not prove a mistress of the game. Herewith her misadventures in the pits.

SELLING 62 AND THE WINNER IS STILL . . .WAL-MART For a company in ripe middle age, the No. 1 retailer does a pretty fair imitation of a growth machine. And there's still more to come, both at home and abroad. by Bill Saporito

CORPORATE PERFORMANCE 73 THE MARVELS OF HIGH MARGINS CEO Stanley Gault has brought championship earnings back to Goodyear by finding and seizing the fastest-growing tire markets. by Myron Magnet

74 STICK WITH YOUR STRATEGY When Donaldson Lufkin & Jenrette had to compete in a new business, it led with its strengths, held to its plans -- and thrived. by Anne B. Fisher

76 AFTER YOU WIN THE FUN BEGINS Now that it has obliterated its rivals, Toys "R" Us is boosting service with fun. by Susan Caminiti

79 COMPANIES TO WATCH

EXECUTIVE LIFE 82 THE NEW FACE OF SMALL BUSINESS Being your own boss -- that secret desire of half the workers in America to yank off their corporate uniforms and go into business for themselves -- is on the upswing. But before you try it, prepare, prepare, prepare. by Brian O'Reilly

84 A NEW TWIST IN CONSULTING

INFORMATION TECHNOLOGY 90 HOW H-P CONTINUES TO GROW AND GROW Eat your lunch before someone else does: Hewlett-Packard cannibalizes its winning products by bringing out cheaper technologies. by Alan Deutschman

103 THE WIRED EXECUTIVE High tech helps a consultant keep company with his clients and save money for his employer by doing without permanent digs. by Alison L. Sprout

MONEY & MARKETS 104 HOW KKR GOT BEATEN AT ITS OWN GAME Kohlberg Kravis Roberts and its smaller rival Forstmann Little dominated the multibillion-dollar leveraged buyouts of the 1980s. But while KKR has failed to earn spectacular returns for its major investors, Forstmann seems to have proven that smaller is better. by Richard D. Hylton

TROUBLE 108 IT'S A BIRD! IT'S A PLANE! IT'S A FLOP! Beech Aircraft spent over $350 million for Starship -- now a dead duck. What lessons can be plucked? by Alan Farnham

DEPARTMENTS 6 EDITOR'S DESK 8 INDEX 12 NEWS/TRENDS Whether tobacco stocks will catch fire, it's the cyber fuzz!, bulge time at the big banks, the curse of the masterpiece, escaping phone-tag hell, and more.

23 FORTUNE FORECAST Interest rates will settle down, leaving the economy room to grow. by Vivian Brownstein

Economic Intelligence: Getting sober about those intoxicating job numbers, and more.

31 PERSONAL INVESTING Where should you seek shelter from market storms? Try the industrial parks and malls owned by real estate investment trusts. by Richard S. Teitelbaum

Also: Whether to buy on Japan's Nikkei, and Portfolio Talk with Roland Gillis of Keystone Custodian.

39 LETTERS TO FORTUNE

123 BOOKS & IDEAS The end of the world is nigh -- or is it? Yes, says Robert Kaplan: The developing world is falling apart. No, argues Barton Biggs: It's better all the time.

129 KEEPING UP Depravity among Conservatives (ask Mr. Statistics), outguessing public radio, the view in third grade, and other matters. by Daniel Seligman

132 ENTREPRENEURS Marketing his own passions, Marvin Shanken bucked conventional wisdom. He struck gold -- and a lode of ego gratification. by Alan Farnham

ABOVE/COVER: Southwest Airlines Chairman Herb Kelleher has lofty ambitions for his operation -- and a decided flair for keeping things hopping at work. Photographs by Louis Psihoyos (Matrix).

FORTUNE (ISSN 0015-8259). Published biweekly, with three issues in October, by Time Inc. Principal office: Time & Life Building, Rockefeller Center, New York, NY 10020-1393. Reginald K. Brack Jr., Chairman; Don Logan, President; Joseph A. Ripp, Treasurer; Harry M. Johnston, Secretary. Subscriptions: U.S., possessions: one year (27 issues) $52.95; Canada: one year (27 issues) $53.73. Second-class postage paid at New York, NY, and at additional mailing offices. Authorized as second-class mail by the Post Office Dept., Ottawa, Canada, and for payment of postage in cash. Member, Audit Bureau of Circulations. POSTMASTER: Send address changes to FORTUNE, P.O. Box 30604, Tampa, Fla. 33630-0604. Customer inquiries: FORTUNE, P.O. Box 60001, Tampa, Fla. 33660-0001. Phone: 1-800-621-8000. ) (c) 1993. Time Inc. All rights reserved. FORTUNE is a registered mark of Time Inc. For subscription queries, call Customer Service at 1-800-621-8000. Time Inc. GST R122781974.