Moving lower for the third straight day, the Dow Jones average lost 17 points yesterday, closing at 2,966.23. Investors appeared worried that the DJ price-earnings ratio (relationship of stocks' prices to underlying earnings) now stands at 21.3 vs. 14.2 a year ago.
LOOKING AHEAD: "We're still fully invested in stocks and bonds; there's no evidence of inflation and we expect an upside TC surprise. We like Dillard Department Stores, Fluor, Waste Management." (James Hocking, chief investment officer, Citibank). . . . "Near-term, stocks are headed higher as interest rates continue to drop." (Gail Dudack). . . . "I'm enthusiastic too; Greenspan's recession comments were right on the money." (Harvey Eisen). . . . "The market will rise soon as analysts raise 1992 earnings estimates." (Lou Holland). Above comments made on "Wall Street Week with Louis Rukeyser," which features portfolio manager Ned Davis tomorrow night.
MARYLAND MEMOS: Black & Decker is listed under "Short Favorites That Have Backfired," in Business Week, July 29. Investors sell a stock "short" when they feel its price will drop, hoping to replace shares at lower prices. B&D fooled investors, rising from 9 in mid-January to 16 at midweek. . . . Next week, Northeast Waste Disposal Authority issues tax-free bonds, free of federal and Maryland taxes. . . . Mercantile Safe Deposit & Trust's "emphasis" list includes AMP, Amoco. Dover, Duke Power, Equitable Resources and IBM. . . . "Over last 25 years, energy sector has underperformed the market by 0.5 percent in the first half and outperformed it by 3.2 percent in second half." (Smith Barney, via Rick Faby.)
HELPFUL HINTS: "Buy U. S. Savings Bonds at the end of the month. Reason: no matter when the bond is purchased, interest is credited from the first day of the month, so you get most of the month's interest tax free." (Fundamental Strategies for Building Wealth by Janet Lowe, $23.95). . . . "When your broker pushes a stock, ask the name of the analyst who made the recommendation. Then follow the stock's performance. Over time, you'll know which analyst to trust and which to avoid." (Medical Economics).
LOCAL HONOR ROLL: "Nearly 175 years ago, the Gas Light Co. of Baltimore installed the first gas lighting system in the U.S.; the utility has since evolved into B.G. & E., one of the nation's most admired utilities. With recession's end, earnings could brighten. The stock, yielding 7.3 percent, could rise over 100 percent to return to overvalued levels." (Investment Quality Trends, La Jolla, Calif.).
BALTIMORE & BEYOND: "Baltimore investment banker Carter Beese, Jr., Alex. Brown, is emerging as an early contender for a vacant seat on the Securities & Exchange Commission." (Business Week, July 29). . . . Bethlehem Steel is a newly recommended stock purchase by Investor's Intelligence; Alex. Brown & Black & Decker were recent successful suggestions. . . . Environment for stocks looks fairly positive; there's liquidity and business recovery just under way. . . . (Investment Counselors of Maryland). . . . "Rarely have we seen such a clear consensus from advisers: a final up move, followed by a significant decline." (Dick Davis Digest). . . . "Economic signals are improving, a plus for stocks." (Zweig Forecast). . . . "CD rates have fallen 20 percent in six months, pushing money into government bond mutual funds where yields are now 7 1/2 to 8 percent." (Mutual Fund News Service). . . . A Silver Spring woman, visiting a downtown Baltimore brokerage firm, was so angry because "your garage was impossible to find" (it isn't) and "your magazines are a year old" (they are) that she cut the appointment short and phoned the firm's Washington CEO to complain. . . . "The high cost of health care is enough to make you sick." (Bits & Pieces). . . . "The happiest time in any person's life is when he or she is in red-hot pursuit of a dollar with a reasonable prospect of overtaking it." (Soundings).