It's enough to make even Charles Darwin blanch: The fittest and biggest galoots prosper, while smaller companies suffer.
But highly-volatile stock markets need not intimidate small investors this year (see Guy Halverson's story, page 16). They can keep their assets off the endangered list, analysts say, by investing a portion of their holdings in some of the following sectors:
Technology: This sector roared back from the August-October correction. Although analysts disagree about the direction for the broad market, they generally agree that high-tech will outperform most other sectors.
Profits of high-tech companies will grow by 30 percent, according to the consensus earnings estimates compiled by First Call Corp. in Boston. Such estimates usually are far too high. But even the most modest forecasts put the high-tech sector well ahead of most other industry groups. Computer and telecommunications companies will probably lead the pack, analysts say.
Pharmaceuticals: For those investors who feel comfortable with this sector, it offers sanctuary in a volatile market plus the potential for robust earnings growth, analysts say. Aging populations in the United States and overseas will fuel demand while innovation will spur profits.
"The drug industry is very predictable and stable and there are a lot of potentially blockbuster drugs coming out in the next couple of years," says Anthony O'Bryan, market analyst at A.G. Edwards in St. Louis.
Bonds: Investors cowed by violent swings in stock prices can flee to bonds, an especially secure sanctuary during a time of dormant inflation (See Guy Halverson, page 13).
"Bonds are a surer bet now," says Don Hilber, regional economist with Wells Fargo Co. in Minneapolis. They "continue to hold safe-haven potential and benefit from any weakness in stocks," he says.