High yields here at home

The Ticker

September 27, 1990|By Julius Westheimer

As the year's third quarter winds down -- with stocks off about 11 percent this year -- we present a column of mostly Baltimore bits, Maryland memos and other tidbits from the local scene:

Did you realize that, at midweek, these local stocks provided the following above-average yields? Baltimore Gas & Electric and Potomac Electric Power, 8 percent; MNC Financial (Maryland National Bank), 17 percent; USF&G, l5 percent?

My dentist, historically a good business barometer, told me he feels a recession is here because his schedule has too many vacancies, people are slow paying their bills and many patients are turning down elective dentistry.

Rick Faby, Smith Barney, sends along a stack of newspapers, commenting, "Here are 14 pages of Boston Globe auction notices this week, showing we're in a depression, not a recession. These are filled with auctions of condos, estates, rugs, furniture, antiques, automobiles, just about everything."

"How Low Can You Go?", asks a U.S. News & World Report, Oct. 1, story, answering, "Many mutual funds don't make you fork over a bundle to get in; many investors escape the minimum initial investment requirement by agreeing to have $25 or $50 transferred from their checking accounts into a fund. At Baltimore's T. Rowe Price, where minimums rose last summer to $2,500, a promise of just $100 a year will do it for the little guy."

Speaking of T. Rowe Price, the firm will mail its 6-page Price Report (Fall, 1990), which says, "After waiting in the wings for most of the 1980s, growth stocks returned to center stage earlier this year." A chart shows superior growth stock returns vs. the S&P 500-stock index.

PaineWebber will host a free seminar on BG&E, with top executives speaking, Wednesday, Oct. 3, 7:30 p.m., Oregon Ridge, Sequoia Room. Phone 771-1110 for reservations; seating limited.

Baltimore Security Analysts host American Brands Chairman and CEO William Alley, Thursday, Oct. 4, Stouffer Hotel, Inner Harbor, noon.

Maryland issued new triple-A tax-free bonds yesterday; check your broker for rates, maturities, etc. If a Maryland tax-free bond yields, say, 6.6 percent, that rate is equivalent to about a 10 percent pre-tax equivalent in the 28 percent federal bracket, whereas 10 percent is now hard to obtain in a high-quality taxable security. Your broker will do your exact arithmetic.

A veteran local broker, who asked anonymity, told me this week, "When many of my customers tell me to sell out all their stocks -- as several did Monday -- that generally means we're near the bottom."

Ticker Query: If you sell out now, how do you know when to buy back? And remember: over many decades, stocks have outpaced government bonds by 17 to 1.

My father, a Baltimore stock broker many years ago, left me this note: "Repeat over and over: one dollar invested on 'Black Friday' is worth 10 dollars on any other day."

MONTH-ENDERS: October in Wall Street is historically an "up" month, rising an average 0.5 percent over the past 40 years . . . Last weekend in Cincinnati, a financial adviser told me, "One reason for diversification is that stock groups ripen at different times." . . . When I received dozens of panicky calls this week regarding safety of deposits and CDs in Maryland National Bank, I responded, "Stop worrying; under insured limits, your money is federally insured." . . . A Catonsville wife programmed her husband's computer to turn itself off automatically every midnight . . . Kiplinger Letter says Bush is not out to pick a fight with Iraq, wants to avoid one if possible . . . "Since January, public concern has grown about the state of the U.S. economy, with women far more pessimistic than men." (Money magazine poll) . . . Legg Mason will mail its September Mid-Atlantic Bank & Thrift Quarterly, also a new report on Hechinger . . . One local wag commented, "On Wall Street, it's like walking up a ladder: you go up one step at a time; then -- thud." . . . The latest Zweig Forecast thinks stocks are still overpriced.

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