Rating stocks. (Wall Street West).

Having spent a professional lifetime on Wall Street, Ed Wedbush, founder and president of downtown Los Angeles-based Wedbush Morgan Securities Inc., finds himself looking forward to 2002. The reason?

Refreshingly, it's fundamentals rather than mania about tech stocks or bio-revolutions. One of the biggest fundamentals to influence Wall Street is, of course, interest rates. Higher interest rates mean higher costs for corporations, and they tend to slow down economic growth. At the same time, bond yields go up, making them relatively more attractive investments compared with stocks. On the other hand, drooping interest rates can play a key role in levitating stocks, as they did in the 1980s and 1990s.

Conventional wisdom is that "rates can't go down anymore." But Wedbush added that interest rates remain high, when adjusted for inflation. Oil prices, gold prices, real estate prices, and the costs of manufactured goods are all coming down, not going up. "That leaves plenty of room for (Fed Chief Alan) Greenspan to cut rates," he said.

Home mortgages, now running 7 percent, could sink a point or two, freeing up consumer spending as homeowners re-finance. Also, home sales should stay strong, helping the construction industries. And, if Wall Street rallies, consumers will feel wealthier, and that in turn will free up more spending.

"All in all, 2002 looks fine, barring another terrorist event," said Wedbush. "We have certainly seen many years with worse outlooks."

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. His new book is "The Pied Pipers of Wall Street: How Analysts Sell You Down the River," published by Bloomberg Press.