Dow swings wildly in '90

The Ticker

November 29, 1990|By Julius Westheimer

Approaching December -- after surviving a 1990 stock market that roller-coastered between a 2,999.75 Dow Jones high (mid-July) and a 2,365.10 low (mid-October) -- many observers wonder what December will bring.

According to the Stock Trader's Almanac, December historically the year's second strongest month (January is first), registering an average 1.6 percent gain over the past 40 years.

For the record, this bear market to date shows a drop of about 15 percent from the peak, whereas the average "bear" growls to an approximate 21 percent loss.

AND NOW WHERE? "Never do I recall such pessimism as we had earlier this fall; we're near the bottom now. In 10 years the Dow average will double, in 20 years it will quadruple." (John Templeton) . . . "For long-term investors, this provides an extraordinary opportunity to own America's premier growth companies at very attractive valuations." (Myron Oppenheimer, portfolio strategist, Security Trust/ Maryland National Bank) . . . "We've seen the bottom and we'll go up from here." (Michael Metz, Oppenheimer & Co.) . . . "A messy Middle East military outcome could shoot oil to astronomical levels and push the Dow below 2,000." (Yale Hirsch)

LOCAL LINGO: Alan Hecht, insurance specialist, sends along dTC "40 Years of Change" with figures comparing 1950 and 1990 in these categories: Average life insurance policy in force jumped from $1,261 to $22,069; consumer price index rose from 24.1 to 128.9; average new car surged from $2,220 to $16,000; Dow Jones average advanced from 216 to 2,543 (midweek); one-pound loaf of white bread climbed from 14.3 cents to 69 cents. For more examples and details, phone Hecht at 752-4236 . . . A Baltimore orthopedic surgeon told me, "The beginnings of recession are here. I say this because, as in past recessions, appointments are fewer, pay is slower and many people pass up elective surgery. Unless this recession is longer than others, it will be over in another year. " (Ticker Note: Speaking of business slowdowns, did you realize that the stock market advanced during six of seven recessions since 1950? Main reason: recessions usually bring lower interest rates, a good Wall Street sign.) . . . "Unless another 1930s-style closing-off of foreign trade occurs, a severe economic collapse is unlikely. But whatever historians call the coming decline, it will be deeper and longer than is perceived by those who play in the Washington sandbox." (Rex Rehfeld, Gruntal & Co.)

TAKE YOUR CHOICE: "Henry Kaufman predicts that investors who buy long-term bonds now will see yields drop slowly at first, then dramatically. These buyers will keep earning today's high return, and the drop in rates will cause the bonds to appreciate, with total return topping 50 percent over time." (U.S. News & World Report, Nov. 12) . . . "The long-term bond market will be the next casualty of the current financial crisis. Ahead of us lie record high interest rates." (Ashby Bladen, Forbes, Nov. 12)

MONTH-ENDERS: A USF&G employee told me that new CEO Norman Blake walked through the building on his first day, shook many hands and seemed "like a real nice guy." . . . "Between 1960 and 1990, $1 grew to $6.56 in T-bills, $19.45 in the S&P 500-stock index and only $6.58 by switching back and forth." (PDI Strategies, headlined "Stay Put With Stocks") . . . Boeing and Bristol Myers Squibb are currently recommended by 10 newsletters followed by Hulbert Financial Digest . . . "To squeeze out money for your 401(k) plan, earmark your next raise for it." (Money) . . . "A middle-income couple needs income between 60 and 80 percent of its pre-retirement level to stay on the same living standard as when employed." (Bottom Line) . . . Ex-Fidelity Magellan Fund manager Peter Lynch (he recently retired at age 47) told me in New York, "Don't worry about the economy, GNP, M1 or the CPI; worry about how good the Dunkin' Donuts coffee is and how many blades Gillette sells." . . .

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