Rating the right stuff

The phone rings early in the evening - just after dinner, still before Ally McBeal sees her visions of skating babies.

The executive recruiter tells you that Fabulous Internet Inc. wants to rescue you from the drudgery of your current job as an accountant. He offers the position of chief financial officer - double the pay, plus bonus, plus stock options, plus Mercedes, etc.

Cool.

But as you nestle into your first day in a high-backed leather chair, you start to ponder performance. Your new boss expects a lot more from you, the CFO, than the old boss expected from you, the number cruncher.

Have you got the stuff to earn the fluff?

That's the dilemma facing the people profiled in the Guy Halverson stories to the right.

They don't have corner offices, but they do have a small corner on perhaps the greatest stock-market boom in history. Nice promotion, nice bonus. Where do we park the Mercedes?

And the question is whether the companies whose stock shares have paid out this bonus still have the stuff. Can their profit power measure up to the high expectations of their stock prices?

If not, they might just get fired.

So far, the American economy has been an investor's best friend, but Federal Reserve Chairman Alan Greenspan has turned fickle.

The economy looks much stronger than expected, growing 6.1 percent at the end of 1998.

But Mr. Greenspan has dampened some of that razzle dazzle. He told Congress recently that the Fed stands ready to pop interest rates higher.

David Francis' column, to my right, covers rates in more detail, but, essentially, our investor's best friend may be a bit overexcited.

"Prosperity has broken out all over," says one analyst. So Greenspan's Fed - eager to attack inflation like a dog ejects fleas - might raise rates to calm things down.

Higher rates would kick out one of the stool legs - falling inflation, falling rates, and rising economy - supporting this bull market.

That's the textbook version, anyway. In the real, perhaps surreal, world of the New Economy, rates no longer seem to rate much with Wall Street.

Mr. Francis talks about rising rates in the bond market, and for you and me that means higher mortgage rates.

For the first time in almost a year, 30-year mortgages last week notched above 7 percent. That compares with 6.49 percent last October.

The primary impact, though, seems narrowly focused on home sales. The broader bottom line: shows a strong economy, with stocks at record highs on Friday and investors eyeing a paper tiger at the Fed.

In fact, the successful investors in the 1990s are the ones who thumbed their noses at Greenspan.

If you had bought every time the Fed folks threatened to squeeze the rate trigger, you'd have bought low and prospered high. To heed Greenspan seems, in hindsight, like abandoning your Mercedes because the gas gauge reads empty.

This economy still has the pedal to the metal. And inflation has lost status as even a backseat driver. It's stuffed somewhere in the trunk.

Witness auto sales last month. They rose almost 13 percent. Yet car prices have mostly come down this year.

Perhaps one of the experts quoted in Guy's stories is right.

You have to value stocks with new parameters, looking beyond profits to intangibles such as staff and potential market share.