(FORTUNE Magazine) – INVESTOR'S GUIDE/COVER STORIES 47 INVESTING IN A NEW ERA

48 STOCKS: BEAR MARKET AHEAD? Earnings continue to surge, but high interest rates imperil the bull. Here's what strategy to take in today's market. by Susan E. Kuhn

55 STOCKS FOR THE NEXT MILLENNIUM

58 MAKING SENSE OF STOCKS The market may seem unpredictable, but it moves with a natural flow. FORTUNE graphs how stocks behave to help unveil the mystery of what galvanizes the Dow. by Susan E. Kuhn and Jane Furth

64 CASHING IN ON HIGH YIELDS Not only are bond yields back to generous levels but now is a perfect time to score capital gains while collecting those payouts. by Richard Hylton

73 REITs ARE A RARE BARGAIN REITs have been pounded in recent months, creating what may be one of the best buying opportunities in the stock market today. by Richard Hylton

78 HOW TO HEDGE AGAINST INFLATION Though not the worry they have been in the past, prices may well drift higher. FORTUNE offers new strategies to protect your portfolio from the steady erosion of inflation. by John Labate

82 HOW TO WIN THE GLOBAL GAME Three international investing champs and other experts tell you how much to set aside for foreign investment -- and where to put it. They all say bet something on emerging markets. by Carla Rapoport

90 THE BEST MUTUAL FUNDS Our exclusive rankings show which funds performed best -- and which made the most for you. They aren't always the same. by Antony J. Michels

107 FUNDS THAT CAN WIN IN 1995 With talented managers and high-powered portfolios, these eight mutual funds are favored to finish first in the year ahead. by Antony J. Michels

113 WHAT IT TAKES TO RETIRE TODAY Daunting as it seems, you must save for retirement. Smart investing will ease the way. by Susan E. Kuhn

125 WHO WILL INHERIT YOUR WEALTH? In an age of nontraditional families, your beneficiaries may not be who you think. by Louis S. Richman

132 WHAT TO DO NOW TO CUT YOUR TAXES Here's how to capitalize on Congress's next moves as the Republicans move in. by Rob Norton

133 HOW TO PLAY A CAPITAL GAINS TAX CUT

137 ARE YOU ON THE NEW IRS HIT LIST? High-income individuals are more likely to be audited next year than at any time since 1988. To keep your tax bill down, resolve to get your paperwork in order. by Anne B. Fisher

142 MAKING YOUR FINANCIAL SOFTWARE PAY Computers can help you plan your finances, prepare your tax returns, and play the market. FORTUNE reviews 16 software packages.

154 TAKING STOCK OF YOUR BROKER From Tiffanyesque service and prices to the no-frills approach, brokers offer it all. Are you getting everything you pay for? by Ani Hadjian

158 MOST PROMISING INDUSTRIES In previous years, our stock picks in these sectors beat the S&P 500 by an average of 74%. Here's who we think will win in 1995. by Patricia Sellers

178 JOHNSON & JOHNSON IS ON A ROLL The world's largest health care company runs its sprawling businesses with deliberately redundant operations and amazingly independent management, all held together by a curious system of ethics that puts profits -- and corporate stockholders -- dead last. So why are its earnings among the best in the industry? by Brian O'Reilly

EXECUTIVE LIFE 196 WHY DO WE WORK? Sure, it's for the money. But more and more people, realizing that's not all there is to life, are embarking on a new search for meaning in corporate America. Here's how three of them have made their work more fulfilling. by Brian Dumaine

INFORMATION TECHNOLOGY 206 THE HOME THEATER BOOM Home-theater systems -- those large-screen televisions with wraparound sound -- are becoming a hot product as their prices drop and they become more available. FORTUNE explains how to set one up in your home. by Alison L. Sprout

210 HOW A MOVIE SOUNDTRACK IS MADE

DEPARTMENTS 8 EDITOR'S DESK 14 INDEX 22 NEWS/TRENDS At last, the recovery includes new jobs (plus who's hiring and who's not), the dream team shakes up TV land, Christmas is for the dogs, and more.

DEPARTMENTS 31 FORTUNE FORECAST The economy should brake enough to keep inflation from soaring, but not enough to prevent continued growth. by Vivian Brownstein

Economic Intelligence: Whether foreigners can win in the U.S., killing another trade myth, and more.

37 ECONOMICS FOR MANAGERS How uninformative advertising actually tells consumers quite a bit. by Rob Norton

40 LETTERS TO FORTUNE

215 PRODUCTS TO WATCH Northern Telecom's Caller ID with special features, new temptations from Haagen-Dazs, and more. by Wilton Woods

219 COMPANIES TO WATCH Integrated Systems is broadening the applications for its sophisticated embedded software -- and with them, the customer base. by John Labate

221 BOOKS & IDEAS Tom Peters's latest tome delivers when real people talk about real work, but it's sure no guidebook for our new age. by Andrew E. Serwer

Also: The End of Japan Inc. and Eco-Sanity.

225 KEEPING UP Nexis looks at Newt (an election special!), how computers call elections, penny flipping in Connecticut, and other matters. by Daniel Seligman

231 ON COMPANY TIME ^ Have you gone about as far up the ladder as you can go? If so, you're not alone -- and it doesn't have to be the end of your world. by Julie Connelly

COVER: Use this Investor's Guide to plot a profitable course through today's investing universe -- just as ancient astronomers once employed armillary spheres like this one to discern important circles in the celestial world. Photos at left and on cover by Victor Schrager.

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.