While the Dow Jones Industrials were setting new records, the INC. Index was trying to work its way out of a deficit situation almost as hopeless as the national debt. That's four straight up-months now, but, based on all averages' equaling zero in May 1982 (when these charts were begun), alas, it's doubtful that our proprietary group will ever again cross over into positive territory. To regain the 40 or so percentage points that it has given up since then will require a massive rally in superspeculative growth stocks. Not since 1983 has anything approaching the necessary magnitude occurred. Too many investors got badly burned after that speculative binge for the INC. type of stock to rise dramatically from the ashes.

One reason is that even the investment bankers who led the charge in the earlier '80s are staying away from fast growers that have yet to prove their ability to convert revenue into steady earnings. Once stung, twice shy is the professional rule these days. Yet contradicting this reluctance are the extraordinary gains that continue in IPOs with returns far exceeding any of the popular indexes on this page (see charts). However, lest this golden goose be killed again, the public will do well to remember that it was avarice on the public's part, as well as on the underwriters', that did in the last IPO boom.

Not a few of these new public companies undoubtedly will become members of the next compilation of the INC. Index -- where, one hopes, they won't simply wilt. Many mysteriously do, however, as the INC. Index amply illustrates. What happens to a company when it comes so swiftly out of the IPO gate, only to fall behind the pack in the open market? Sure, a few get into trouble and fall into Chapter 11; but those are offset by the few others that go on to become earnings stars. Often the worst that occurs is simply lack of sponsorship -- Wall Street's term for market-makers' promoting the stocks they handle to institutions and brokerage houses. Indeed, nothing so drastic befalls young companies as to account for the comparatively miserable showing of the INC. Index. So one has to conclude that while there may not be a spectacular rally in store for them, in the near future they ought to attract a good deal more investor interest.