Rising for the second straight day, the Dow Jones average gained 19 points yesterday. When Wall Street opened today, the DJ index stood at 2,949.50, up 584 points since October's low. At today's level, Dow stocks sell, on the average, at 18 times the last 52-weeks' earnings, versus a 12 price-earnings ratio one year ago this week.
LOOKING AHEAD: "While there are good reasons to believe that the market is getting frothy, it still appears that stocks are headed higher." (Telephone Switch Newsletter). . . "Since the January low of DJ 2,470, the Dow climbed 500 points (20 percent) in three months without more than a 4 percent setback. This is the way bull markets behave." (Switch Fund Timing). . . "With aftermarket performance of initial public offerings quite good, demand for new issues will increase. When an IPO feeding frenzy develops, it signals a market correction." (S&P Special Situations). . . "We'll see the Dow near 3,200 before serious trouble sets in, and that could be the top of a very old bull market." (Professional Investor)
TAKE YOUR CHOICE: "At 18 times trailing 12 months' earnings, the Standard & Poor's 500 index is in overvalued territory, and insiders continue to bail out as the public rushes in." (LaLoggia Report). . . "Based on stocks' price earnings ratios, the market does not appear overvalued. The S&P 500 price-earnings ratio, figured on estimated 1991 earnings, stands at about 15 times earnings." (S&P Outlook, April 17)
LIGHTER SIDE: Speaking of predictions, I overheard this quip in The Back Fin bar, Pikesville: "Eastern Shore farmer No. 1: 'This here rope I'm holding can predict the weather.' Eastern Shore farmer No. 2: 'How do it work?' Farmer No. 1: 'Well, when it sways back and forth, it's windy. When it gets wet, it's rainin.' "
20/20 HINDSIGHT: "If you had invested $10,000 in these stocks on Jan. 1, 1970, you would have had these amounts on Dec. 31, 1990: Philip Morris $698,000; Boeing $415,000; McDonald's $288,000; Exxon $237,000; General Electric, $138,000; Procter & Gamble $100,000. And the lower end: AT&T, $65,000; General Motors $47,000; Sears $26,000; IBM (surprise!) only $25,000; Eastman Kodak $22,000; Bethlehem Steel $16,000." (The Investment Reporter)
LOCAL LINE: "Future dividend changes will depend on our progress, future prospects and effectiveness of our capital conservation program." (USF&G annual report). . . "USF&G's cost-cutting efforts and investment portfolio repositioning are major long-term positives. The new dividend appears safe." (S&P Outlook). . . Potomac Electric Power Co. popped up in the 52-week new high listings a few days ago. Even at 22 the stock yields over 7 percent, more than double today's average stock yield. . . . Tomorrow, Wall Street Week with Louis Rukeyser features "A Small Stock Market?", with panelists Frank Cappiello (new W$W Hall of Fame member), Mary Farrell and Monte Gordon.
SPRING SNIPPETS: Be sure to read Tony Hiss's long feature, "Reinventing Baltimore" in the current New Yorker magazine, dated April 29. The author is the son of Alger Hiss. . . . "Based on the last 40 years, best day of the week in Wall Street is Friday, worst day is Monday, best month is November, worst month September, best hour 2-3 p.m." (1991 Stock Trader's Almanac). . . "First you loved them, then you hated them. Now, with prices down, should you buy REITs [real estate investment trusts]? Yes." (Investment Vision, April/May) . . . "Before you travel abroad, buy a small amount of foreign currency for porters, taxi drivers, first meal, etc." (Cosmopolitan). . . "To save money on London shows, call theaters directly from the United States and use your credit cards." (Consumer Reports Travel Letter) . . . "Get another real estate broker if your house hasn't sold in three months, even in today's tough market." (Money Guide: Your Home).