Dow is ahead 10% for year



Inching ahead four points in sluggish trading, the Dow Jones average closed yesterday at 2,910.33. The DJ index now stands 277 points, or about 10 percent, above its New Year's Day level.

AND NOW WHERE? "It's time to nibble; recession will end soon and 1992 will be a good stock year." (Carter Randall) . . . "I'm optimistic on stocks despite the flood of new issues." (Beth Dater) . . . "Our indicators say that closing above the Dow Jones 3,000-3,050 area will take more time." (Addison Report) . . . "The only reason people are buying stocks at current valuations is because they have nothing else to do with their money." (Blue Chip Correlator) . . . "Stocks will fluctuate." (J. P. Morgan, from 75 years ago)

On "Wall Street Week with Louis Rukeyser," Steven Einhorn, Goldman Sachs' highly respected guru, said, "Stocks are moderately overvalued, but overvaluation generally doesn't end a bull market. For strong markets to end, inflation must rise and the Fed turn hostile, neither of which conditions we have now. We're in a bull market, with stocks rising about 13 percent a year, twice the rate for other securities. Best buy: growth stocks like Merck, Bristol Myers-Squibb, Abbott Labs, Philip Morris, General Mills. Stocks will be higher nine months from now, with downside limited."

BALTIMORE BEAT: Myron Oppenheimer, vice president of Security Trust/Maryland National Bank (301-244-6590), sends his firm's Spring Investment Review. Excerpts: "Don't reach for high yields; instead, look for dividend growth . . . Increased income received from earnings growth is unique to stocks . . . Although higher-yielding stocks will do well as interest rates fall, growth stocks should do even better as future earnings are discounted at a lower rate." . . . Rick Faby, Smith Barney (301-494-1853) says, "Over the next few years, emerging growth stocks are likely to substantially outperform broader market averages." His firm's buy list includes AMP, Bristol Myers-Squibb, General Electric, Mercantile Bankshares, Philip Morris, etc. (Both men will send free complete letters if you call their numbers listed above.)

MISLEADING INDEX: How important is the Dow Jones average? It's important because it's the best-known index, published daily by the Wall Street Journal since 1895. But, despite the euphoria when the DJ hit 3,000 recently, let's keep perspective by comparing all-time highs in some Dow components with current prices. For example, USX Corp. (U.S. Steel) hit 72 in 1959, but at midweek it's around 25. General Motors reached 57 in 1956, now 36. Blue chip IBM touched a high of 175 in 1987, but today it's around 103. Eastman Kodak was 70 in 1987, today 41. Navistar hit 45 in 1979, now around 3. Locally, Bethlehem Steel, which peaked at 48 in 1976, today hovers around 15. In all, 13 Dow components stand well below their peak prices. All prices adjusted for splits.

BITS & PIECES: Over the last 10 years, these investments brought these annual percentage rates of return: Japanese stocks, 14.9 percent; S&P 500 stocks, 13.9; U.S. government bonds, 13.7; Art, 13; T-bills, 8.5; residential housing, 4.4. (Data from Barron's, May 20, which carries additional listings) . . . "Wall Street Week" tomorrow night focuses on advertising and broadcasting . . . Legg Mason will mail a report on Bell Atlantic . . . "What a first quarter it was! Not only were the first three months bullish, but it's the first quarter in years in which secondary stocks outperformed blue chips." (Hulbert Financial Digest) . . . Giant Food Inc. is listed in S&P Outlook, May 15, under "Uptrending Profits." . . . Dollar Stretcher says you can save money on overseas travel by buying a book of "Half-Price Europe" coupons for $69. For details call 1 (800) 521-9640 . . . Business Week, May 20, says investment pro Elaine Garzarelli now picks Ford, GM and Chrysler . . . "Dig a well before you are thirsty." (Bits & Pieces) . . .

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