What a great time to be investing.

Sound crazy? Everyone's wailing about the state of the stock market, their personal holdings, and a potential recession. Sure, many companies have been pummeled into nonexistence, and many more are just about under water, but not Rule Makers -- this is when they give the upstarts their comeuppance and take their market share back. A slow or declining 2001 could leave the Rule Makers' competition twisting in the wind.

"This might sound callous, but Cisco (Nasdaq: CSCO) is better off if the stock market stays soft during the next 12 months," said CEO Chambers during a recent analyst conference. Rule Makers are large and robust enough, like a monster truck, to drive right over the rocks in the road that smaller, lesser competitors must drive around, and many will be obliged to drop out of the race.

Immature-but-growing companies depend on continued success to finance their business -- so when a slowdown occurs, it can be fatal. Cisco, with the ability to handle an indefinite number of obstacles, openly welcomes a stock market slowdown. In fact, Cisco just put a billion dollars of venture capital cash into developing the Asian market for its products (in a $1.5 billion deal with Softbank). That's right, Cisco, perhaps the most well-managed technology company in the world, has decided that right now is the time to be investing in its market. There's another billion from Cisco on the way as part of the deal, too. Neat that Cisco has the cash to do this, and not a penny of debt to hold it back. Nortel (NYSE: NT) and Lucent (NYSE: LU) have more debt than cash, by the way.

Intel (Nasdaq: INTC) likewise stands to get some relief from AMD's (NYSE: AMD) brash -- and effective -- competition as the PC market cools down. Why? Intel can afford to make price cuts, yet still continue to spend ever more heavily on the research and development (R&D) that's going to bring great new chips to market. AMD, though, is going to have to retreat to survive despite its recent success. It just doesn't have an Intel-sized war chest of cash to see it through. Intel still has 13 times more cash than debt. AMD has as much long-term debt as it does cash. Intel has far better margins. This can only add up to one thing: a harsh market is going to hurt AMD more than it's going to hurt Intel. AMD can't expand as quickly, spend as robustly, cut prices as sharply, or continue to spend as aggressively as Intel on R&D.

Yahoo! (Nasdaq: YHOO) in particular stands to gain a lot in a down market. As dot-coms left and right go crunch, Yahoo! picks up more and more Web advertising market share. Yahoo! has the cash to expand its possibilities into every conceivable market, and to keep operations humming despite a precipitous decline. In the midst of a particularly tempestuous market, Yahoo! will come out one of the very few healthy survivors, and much stronger for having done so. More than any other single reason, this is why the Rule Maker portfolio keeps acquiring more shares of Yahoo!

Nokia (NYSE: NOK) isn't offering free rides for its competition, either. It has kept its simple policy of cranking out mobile phones and letting others fight pricier, riskier battles. As for Nokia's direct competitors, look at Nokia's cash position: over three times as much cash as debt. Now look at Motorola's (NYSE: MOT): three times more debt than cash. Nokia has larger market share than Motorola and Ericsson (Nasdaq: ERICY) put together, and higher net margins than either, or even both combined! When the going gets tough, who's going to come out on top?

It's much the same story for JDS Uniphase (Nasdaq: JDSU). At the end of the day, only JDS offers its extraordinary breadth of products, and JDS is the only player in its market even close to enjoying Rule Maker status -- it simply doesn't have any significant competition, and with sales of nearly $1 billion in the most recent quarter and with sales growth way more than doubling according to last night's earnings release, I'd say the company is continuing to execute phenomenally. (Check out xerohype's excellent Rule Maker analysis of the quarter in this post.) As a result, the only news worth talking about is that which JDS creates -- will the big merger with SDL Inc. (Nasdaq: SDLI) go through in February? How much faster will the company grow then? Will the Zurich plant have to be excluded to pacify the Department of Justice (DOJ)?

Speaking of the DOJ, do I even need to mention Microsoft (Nasdaq: MSFT)? The company has a couple dozen billion in cash, zero debt, and perhaps the highest margins of any company ever. In many ways the ultimate Rule Maker, Microsoft will not allow this downturn to go unaugmented. It'll use this opportunity to drive out or buy up competitors and expand its presence into new markets before other companies can say "X-Box."

Rule Maker classic Coca-Cola's (NYSE: KO) story is a bit different, however, with Pepsi (NYSE: PEP) offering it a far more serious challenge than, say, AMD does Intel. But neither Coke nor Pepsi has been hurt by the general market conditions, so we'll have to look at them another time. Similarly, I'm not commenting on American Express (NYSE: AXP) or T. Rowe Price (Nasdaq: TROW) because it hasn't been a tough market for financials. Pfizer (NYSE: PFE) and Schering-Plough (NYSE: SGP) have likewise enjoyed gains in what has been a good market for pharma and biotech. A certain amount of diversification has its advantages.

But for the rest of the Rule Makers, these have been harsh, demanding times -- which is exactly when Rule Makers shine. Yes, these times are tough even for Rule Makers, but they're tougher for everybody else. Everyone complains about stock options. Sure, Yahoo!, for example, has to do something to compensate its employees beyond stock options when the company's stock gets hit so hard -- but it can. It has the cash. Yahoo!'s competition has been hit even harder, and doesn't have the reserves to spare. This is the fundamental advantage of all the Rule Makers, and it's why we believe that, over the long term, a portfolio of Rule Makers will beat the S&P 500.

Until next time, invest in the best!