In its steepness and suddenness, August's rally was, of course, highly reminiscent of two years before. Except that it underwent far more seesawing -- up some 20 points one day, down 15 a week later, and back up 15 in another day or two. Such large-scale whipsawing frequently occurs in commodities markets, but it is seldom seen in equities (unless some spectacular piece of news hits the Street). Perhaps these perky ups and downs mark an emerging new personality, quite different from the relatively somnolent one that endured from the spring of 1983 to the summer of '84.

But this kind of action can be treacherous for the timorous, because one day's paper profits shrink and turn to the next day's losses. But it also can be quite profitable, in that buyable stocks don't run away quickly, and can often be picked off at reasonable prices even after brisk gains. Going into September, that was certainly the case with a large body of upward-trending stocks.

The trouble was in the early going at least INC.'s common stock collection was not among them. By midsummer even NASDAQ -- a group of volatile smaller companies similar to the cast of the INC. Index -- had pulled away from the INC. bunch (set chart). lndeed NASDAQ did just about as well as the hoary Dow. But why did a pool of more slowly expanding companies outdo the country's top 100 growers? The reason is in the earnings, clearly. Sustaining vigorous sales growth usually requires large expenses in development and promotion. Most public investors -- and a number of institutional investors -- don't take the trouble to curry through a company's financial statements to find out why per share earnings may have been "disappointing," even if the company itself is healthy and its products strong.

This is a situation that, unfortunately, can be compounded by the companies themselves. Founders and officers of fast growers understandably tend to be brash and boastful, boosting public expectations beyond the realities of quarterly P&Ls. This has recently been the case in more than a handful of INC. stocks. But if the market rally endures long enough, the truth will out, and today's weighty costs will become tomorrow's strong earnings. TThis is a situation that, unfortunately, can be compounded by the companies themselves. Founders and officers of fast growers understandably tend to be brash and boastful, boosting public expectations beyond the realities of quarterly P&Ls. This has recently been the case in more than a handful of INC. stocks. But if the market rally endures long enough, the truth will out, and today's weighty costs will become tomorrow's strong earnings.