(MONEY Magazine) – History, to paraphrase the 19th-century thinker Thomas Carlyle, is nothing more than the biography of great men and women. That's worth keeping in mind as you plot your 1997 investment moves. For next year, as in most years, the actions of key political and financial figures will have an oversize impact on the markets for stocks, bonds and mutual funds. To understand who these leaders are likely to be and how they might behave is to understand how you can make money--or may risk losing it--in 1997.

President Bill Clinton and Federal Reserve chairman Alan Greenspan remain the two most dominant players in the United States. But they will share the stage with other powerful actors, both here and abroad. One, for example, sees next year as an overdue opportunity to win higher wages for American workers; another hopes to persuade you to face up finally to runaway entitlement spending; and yet another aims to convince ordinary investors to put even more of their savings into stocks. The success or failure of these key individuals could make all the difference in whether the Dow keeps rolling toward 9000 or trundles off on a money-losing detour. We don't pretend to know exactly what moves they will all make. But whatever they do, you can be sure that you--and your wallet--will feel the effects.

BILL CLINTON HIS FISCAL POLICY COULD MAKE--OR BREAK--THE MARKETS

During his first four years, Clinton presided over an economic policy that might as well have been designed by bond traders. He slashed the budget deficit by 63% and helped drive down long-term interest rates from 7.7% in 1992 to 6.5% recently. In his second term, however, Clinton could pull a U-turn and let the deficit drift up. True, the 50-year-old President grudgingly endorsed a version of a balanced-budget amendment in November (only to have his staff promptly recant for him). But he'll take considerable heat politically if he keeps putting the deficit first.

Clinton's problem is that the economy is slowing. As it winds down, the deficit will rise by itself--largely because of Medicare spending. Watch closely to see whether Clinton is able to work with the Republicans to reform entitlements. If not, investors worried about inflation could drive up long-term bond yields to more than 7%, and that would sink stocks.

ALAN GREENSPAN NAVIGATING THE STRAIT BETWEEN RECESSION AND INFLATION

The grizzled, 70-year-old Federal Reserve chairman has few equals as an economist--or as a politician. He's created a conservative's dream economy: inflation below 3%, fat corporate profits and a stock market that has doubled in only five years.

Now, though, Greenspan is facing the most difficult point in every business cycle. Inflation is poised to creep above 3% even as economic growth dwindles to an annual rate of 2% or less. If the Fed chairman lives up to his reputation as a relentless inflation basher, he'll raise interest rates more than half a percentage point early next year--risking a recession and a stock market decline far larger than the 15% we expect.

We're betting, however, that the politician wins out over the economist. Greenspan won't raise rates more than half a point--and in so doing, he'll force the President and Congress to share responsibility on spending to keep inflation in check.

BOB KERREY SENATOR FROM NEBRASKA FORCING A SHOWDOWN ON ENTITLEMENTS

During the campaign, both parties managed to duck any serious discussion of the desperate condition of Medicare, which is running $4.2 billion a year in the red, and Social Security, which is projected to start running a deficit in 2012. Next year, however, politicians will need real solutions. One person they will turn to is the 53-year-old Democrat from Nebraska.

Kerrey headed the Bipartisan Commission on Entitlement and Tax Reform, which last year released the most thoughtful plans yet to trim Medicare and Social Security. While the commission's proposals were too hot to handle in the prelude to an election year, Kerrey's influence on the entitlements debate lingers. One of his main goals is to divert 32% of the amount workers pay toward Social Security into personal retirement accounts. While Clinton is wary of privatization, there is now broad support for routing some of the Social Security trust fund into stocks--a change that could pump $1 trillion or more into the markets in just 10 years.

NANCY DICKEY PRESUMPTIVE PRESIDENT, AMA

Aiming to curb managed care's cost-cutting spree Thanks largely to the recent expansion of managed care, health-care costs rose only about 2% in 1996. Nancy Dickey and her colleagues could change that. A family doctor turned lobbyist, the 46-year-old Texan is a shoo-in to be elected president of the American Medical Association next year. Dickey plans to use her association's clout to temper the aggressive cost-cutting trend in managed care. She'll also push to reform Medicare by taking the program out of legislators' hands and entrusting it to an independent regulatory board. While her agenda may be good news for health-care consumers who want more choice, experts say that it could help drive up health-care costs 2%, for a total increase of 6% to 8% next year.

CROWN PRINCE ABDULLAH HEIR APPARENT TO THE SAUDI THRONE

He could tighten the world's oil supply Forget Saddam Hussein. The force to reckon with in the Middle East is Saudi Arabia's Crown Prince Abdullah, 74, the de facto leader of the world's largest oil exporter following his half-brother King Fahd's stroke last November. Abdullah is far less willing to accommodate U.S. oil interests than Fahd, in part because of increasing pressure from Islamic fundamentalists at home. So, he could find it politically expedient to flout Washington by cutting production to keep oil prices high. The result could be higher inflation here, lower corporate profits, and falling stock prices. If oil prices rise much above the recent $24 a barrel, U.S. investors could feel the pain.

CHARLES SCHWAB CHAIRMAN, CHARLES SCHWAB & CO. HE WANTS TO KEEP YOUR CASH CASCADING INTO STOCKS

If the small investor is the locomotive of the current bull market, Charles Schwab, more than any other single person, is the guy laying the tracks. The 59-year-old chairman of the $236 billion brokerage firm that bears his name, Schwab first lured the masses to the stock market (with customer-friendly discount brokerage) and later delivered mutual funds to the masses (with his mutual fund supermarket, which allows customers to buy 600 mutual funds from 80 different families without a transaction fee). Schwab is now focusing on the 401(k) market and on the Internet, where e.Schwab customers can trade as many as 1,000 shares for just $29.95 per transaction. As long as Schwab keeps finding new ways to turn ordinary folks into avid stock investors, the market can only benefit.

JOHN SWEENEY PRESIDENT, AFL-CIO

He'll push to give American workers a raise This smiling, suspender-wearing former cemetery worker has brought Big Labor back from the dead since becoming AFL-CIO president last October. Unlike his immediate predecessors, Sweeney, 62, is pumping serious cash into expanding the union's 13.1 million membership. Next year he will spend an unprecedented $20 million to raise wages and benefits by organizing workers in industries that have not yet been unionized, such as strawberry farming. In general, every extra dollar in wages lifts consumer spending by 95[cents]. But if productivity fails to keep pace with wages, labor costs could squeeze corporate profits--and take stock prices down too.