WASHINGTON, D.C. – The Forbes Beltway Index tracks the market progress of companies with close business ties to the U.S. federal government: the biggest contractors, government-sponsored enterprises and companies enjoying unique competitive advantages thanks to federal law.

Each Monday, we update price data for the index, in which we give equal weight to each of the component companies. With an equal-weighted index, all components have the same contribution to the index value. This contrasts with big indexes such as the Standard & Poor’s 500, which are weighted toward companies with the largest market capitalizations.

No matter how you feel about what goes on in Washington, our Forbes Beltway Index companies should be of investing interest. Why? For one, winning a government contract is no picnic. Assuming everyone plays by the rules, a company must show procurement officials that it has good products and services, deep technical expertise and, perhaps most important, the financial stability and discipline to carry out the contract. In many cases, companies must provide several years of audited financials before winning a bid.

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WASHINGTON, D.C. – Big events, such as the outbreak of war, prompt scribblers such as ourselves to prognosticate. Some of our calls are better than others. Take this gem of an observation, made at the outset of the Iraq War three years ago: “With Iraq out of the way,” we wrote, “the Bush Administration will be more likely to prioritize resolving the Israeli-Palestinian conflict.” Iraq, alas, has hardly fallen out of the way, and the Israelis and Palestinians sure don’t seem any closer to living in harmony than they did three years ago.

Better, however, were our calls on stocks in Iraq’s neighborhood–stocks which we thought would benefit from the still-elusive peace dividend. On average, those picks have risen 47% annualized since March 20, 2003, compared with a 16% gain for the S&P 500.

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WASHINGTON, D.C. — The homeland security business has been good to Washington’s Paladin Capital Group. The private equity shop closed its $235 million Homeland Security Fund in 2004. Michael Steed, Paladin’s founder and managing partner, says that once that fund is fully invested, the firm’s logical next step is to put together another one.

“This is not a passing fad,” says Steed, 57, noting that he sees pitches for around ten prospective investments each week.

What’s behind Paladin’s good fortunes? In a terror-obsessed world, having some marquee intelligence and ex-military names among the firm’s managing directors doesn’t hurt. One notable: R. James Woolsey, present partner at Booz Allen Hamilton and director of the U.S. Central Intelligence Agency from 1993 to 1995.

But Paladin also benefits from taking an expansive view of homeland security. Terrorists, Steed suggests, want to do two things: Kill people and attack infrastructure to wreak maximum economic havoc. Under the rubric of critical infrastructure, Steed includes transportation systems, food systems, pipelines, water, electricity, the Internet, financial networks and communications. “Anything that moves,” he says.

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Full story at Forbes.com

As the November elections loom, congressional priorities may lean more toward job security than lawmaking. But Stuart Sweet, president of Capitol Analysts Network, cautions that election-year politics will hardly bring Washington to a halt.

“It’s a beginner’s error to say, ‘Nothing will happen in an election year,’ ” says Sweet, whose Chevy Chase, Md.-based research group advises money managers on political risk.

Sure, Congress may put off tinkering with certain hot-button items, such as entitlements reform, until future sessions. But Sweet suggests plenty of issues impacting business will see significant action before election time. “All the committees are busy working on something,” he says. “And only a few of them end up on the front pages of the paper.”

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WASHINGTON, DC – Interest in upgrading America’s health care information technology runs high in Washington. President George W. Bush promised more health IT in his recent State of the Union address, several related bills are bouncing around Capitol Hill and more legislation is likely to be introduced this spring.

Why the clamor for health tech? Pols, academics and think tankers, no matter what their political stripe, see technology as one way to duck the approaching tsunami of baby-boomer health expenses. The private sector is interested too. “Starbucks now spends more on health care than it does on coffee beans,” said Will Marshall, president of the Progressive Policy Institute (PPI), at an event organized by that group last week.

No surprise, Wall Street has also taken a shine to the area. Consider outfits like software developer Cerner and Omnicell, which makes items like computerized medication dispensing systems. Both stocks have surged in the past year and now sport rich valuations.

Investors looking to play the trend should consider the big providers of technology services. The stocks look reasonably priced and the companies could have an important role as health care wires up. One in particular to watch here: Perot Systems. At that same PPI event in Washington last week, Dr. Richard Pico, Perot’s chief medical and technology officer, elaborated on how its offerings could link up U.S. health care interests.

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WASHINGTON, D.C. – By Reuters’ count, there are 1,784 technology stocks listed on U.S.

exchanges. With a series of screens on profitability and valuation, we trimmed that number down to six promising bets.

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