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	The Year in Review Introduction The Top Investing Stories The Winners The Losers Our Greatest Hits What We've Learned Investing Opportunities in 2001 The Worst of "Investing 2000"

AT&T Breakup and Telecom Troubles
By Chris Rugaber (TMF Chris)

Certainly one of the most prominent business stories of the year was the decline and final break-up of Ma Bell. The venerable telecom, one of the most widely held stocks in the U.S., began the year with big ideas, having purchased sufficient cable assets to become the largest cable provider in the country. Those cable lines gave AT&T (NYSE: T) direct access to about 20 million homes, which the company planned to use to sell all sorts of services, including local and long-distance telephony, high-speed Internet access, and digital video.

However, voice revenues declined faster than the company could ramp up these new services, and with AT&T shares down over 45% by the fall, CEO C. Michael Armstrong threw in the towel and announced a restructuring of the company on October 26. AT&T will be split into three asset-based companies, one of which will also issue a tracking stock. While the break-up won't be complete until 2002, the announcement was the final blow to a company that basically was American telecommunications until its court-ordered divestiture in 1984.

Of course, AT&T was not alone: its rival, WorldCom (Nasdaq: WCOM), decided to issue a tracking stock for its consumer business (primarily voice) a couple of weeks later, in order to highlight its more dynamic data and business services division. Despite these moves, the market seems to be unsure on exactly how or when the telecom carriers will recover and begin to create value. The companies are cheap -- WorldCom's P/E is approximately 8 -- but their futures are as uncertain as ever.

The Napster Battles
By Rick Aristotle Munarriz (TMF Edible)

Music wants to be free. Musicians -- and their record labels -- want to get paid. The clash between freedom, ethics, and copyright laws came to a head this past year when lawsuits threatened to shut down Napster. Closing in on nearly 40 million registered users, the popularity of the free music sharing software was never in doubt. Actually, it was probably the heavy traffic that lined the upstart up in front of the crosshairs of the recording industry.

While the tech world buzzed over the promise of peer-to-peer (P2P) file sharing in applications beyond MP3 tune trading, Napster thrived in the face of adversity. Many college campuses banned the bandwidth-devouring downloads. The legal system found Napster trespassing on intellectual property. However, by year's end, Napster was still around. It was more popular than ever, pending appeals. And it had even made nice with one of the five major labels, coming to terms with BMG in exchange for a paid subscriber approach to licensing its catalog. Harmony. What a musical concept.

Sequencing the Human Genome
By Tom Jacobs (TMF Tom9)

What sport it was to watch Celera Genomics (NYSE: CRA) and the government-funded Human Genome Project (HGP) race to sequence the entire human genome -- every human gene! It had everything from breakthrough science about our most basic makeup to colorful big-ego personalities -- Celera's J. Craig Venter and the HGP's Frances Collins -- battling in public. Even politics: Would tax-funded research win, or would the private sector do the job faster and better?

Bioinformatics companies soared as the human genome sequencing publicity gathered momentum. For example, Celera Genomics catapulted from the mid-$30s in December to $276 in March, while Incyte Genomics (Nasdaq: INCY) space-shot from the mid-$20s to $144.44. Whew.

When the parties declared a joint victory in June, it was like the letdown after your New Year's Eve party: Great time, but then you have to clean up all that confetti. In this case, about 100,000-120,000 genes with 3.2 billion letters (A, C, T, and G over and over). Even if you believe Venter and others that there are really 50,000 or fewer genes, we've still got terabytes (trillions of bytes!) of raw data. Without knowing what it means, drug companies can't make better drugs and doctors can't individualize treatments.

As reality set in, Celera and Incyte slumped, and these days they trade around where they started last December. Investors have rarely seen anything so volatile, so fast.

Now, the work shifts to functional genomics: Which genes are expressed -- turned on or off -- in given tissue? How do they behave in response to drugs? And not just genes. Many believe that proteins are where the real action is. But each gene codes for 5 to 10 proteins, and they change after creation. Protein info-gathering will be much more complex than for genes alone.

So sit back, learn more, evaluate business models, and think long term. And luckily for investors who suffer from stock vertigo, the human genome is only sequenced once.

Value Investing: From Death to Rebirth
By Brian Graney (TMF Panic)

Value investing -- the idea of buying companies at a discount to their intrinsic values -- has been called many things in recent years, but "popular" hasn't been one of them. After being blown away by the soaring Nasdaq in back-to-back years, many die-hard value investors were staring at another 15% gain in the rampaging, tech-heavy index after just the first two months of 2000.

They were roundly chided as being "dinosaurs" who just didn't get it, especially during a time when the very definition of "it" seemed to change weekly on Wall Street. The assault came to a head in March. The world's best-known value investor, Warren Buffett, started off the month by publicly eating crow for 1999, his worst investing year ever. The month ended with Julian Robertson closing his Tiger Management group of hedge funds after a long and impressive run, claiming that he would no longer take part "in a market which I frankly do not understand."

But soon after these events, the bubble burst -- so to speak -- and never reformed. By late in the year, value investors were reaping hefty gains while the Nasdaq was declining by as much as 50% from its March high. With a quick flip of Mr. Market's magic wand, the value-investing frogs had been transformed into princes.

What is to be learned from value investing's topsy-turvy journey in 2000? Besides the fact that no investing style stays in favor forever and consistent outpeformance in every single short-term period is an unattainable goal for any investor, there is another possible conclusion. Perhaps 2000 wasn't the year that value investing started working again so much as it was the year that the idea of "groupthink" stopped working after several years in the sun. If that theory indeed turns out to be true, then the way to beat the market in the future won't be simply to "think value" or to "think growth," but to "think different."

The Endless Election
By Chris Rugaber (TMF Chris)

While the impact, or lack thereof, that any president or presidential campaign has on the economy and the stock market is a subject of perennial debate, there's little doubt that this year's extended campaign brought more uncertainty to the markets than most investors prefer. While hanging chads and legal wrangling were blamed for some of November's market woes, the hope that a final result in the election would bring stability to the markets turned out to be a vain one.

In addition, the pre-voting campaign, for lack of a better term, touched on several issues that affect Americans' personal finances. Both candidates discussed tax cuts, an issue that spurred a debate between Fools earlier this year, and for the first time in decades, serious proposals to reform Social Security were floated by both campaigns. In a year when many derided the candidates as bland automatons that differed little, their individual Social Security plans could hardly have been more different.

Who knows what President George W. Bush's administration will bring, but much of his agenda would significantly affect individual investors: income tax cuts, estate tax cuts, Social Security reform, a possible change in the Microsoft case, and a different tone at the SEC are a few examples. If his administration is anything like the campaign that produced him, investors can at the very least expect the unexpected.

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