Stocks surge to new peak

The Ticker

August 29, 1991|By Julius Westeimer

Surging into new high ground, the Dow Jones average climbed 29 points yesterday. When Wall Street opened this morning the Dow indicator stood at 3,055.23, ahead 690 points, or 29 percent, since last October's low and up 422 points, 16 percent, since this year began. Here is a rundown of recent opinions by the gloomsters and the cheerleaders:

THE GLOOMSTERS: "If you're tempted to make a major commitment to stocks now, get this: going back to 1925, whenever the ratio of the Standard & Poor's industrials to their book value exceeded two-to-one, Wall Street was in dangerously overvalued territory. Right now, that price-to-book-value ratio is slightly above 2.8 to one." (LaLoggia Stock Market Forecast) . . . "The higher an overvalued market climbs, the more vulnerable it is to a correction or crash. It will be a correction if the economy rebounds, possibly a crash if it doesn't." (Nielson's Letter) . . . "We are very, very close to a major high." (Jerry Favors Analysis) . . . "Red flag is up and waving." (Kenneth Brown Report) . . . "Switch 50 percent of stocks to cash; buy on big setbacks." (Bob Nurock's Advisory)

THE CHEERLEADERS: "A factor that should push stocks up is that there really is no better place for your money now. Market will break new highs in slow, lackluster fashion over next few months." (OTC Growth Stock Watch) . . . "Our objective is still the 3,075-3,090 level." (Pado's Perceptions) . . . "Best evidence that a bull market is still in force is to see new all-time highs && recorded. Probabilities still favor continuation of basic advance in stocks." (Lowry's Reports) . . . "DJ will climb to 3,600 by mid-1992." (Don Hays, Wheat First)

Ticker Note: Of about 25 stock market forecasts I read in the last week, three-quarters were gloomy.

BALTIMORE BEAT: "Earnings have been the driving force to stock performance. Companies with improving fundamentals and earnings growth should outperform stocks with lackluster earnings. Stay with quality, buy stocks that do well in any economic environment." (Myron Oppenheimer, Security Trust/Maryland National Bank. Phone 244-6569 for full letter) . . . "Some 20 years ago we initiated what is today the oldest futures fund in the world, the Campbell Fund. It has returned to investors more than 100 times their initial investment, or 26 percent compounded annually."(Keith Campbell) . . . Legg Mason has new comments on Black & Decker ("Newell deal seen as slight positive.") and Giant Food ("Competitive situation leading to price-cutting; earnings estimates reduced.")

MONTH-ENDERS: "Collateralized mortgage obligations (CMOs) are a mouthful, but to small investors in search of income, to

know them is to love them. See your broker." (Kiplinger Personal Finance Magazine) . . . Loyola Federal will answer your mortgage questions if you dial 1-800-735-0525 . . . "Small stocks did well recently, but these were largely 'bigger small' stocks, and all returns were better, total return (income plus or minus appreciation) than the 1.5 percent on long government bonds." (Rick Faby, Smith Barney) . . . "Nervous, pessimistic, bearish -- that was the mood among financial pros and small investors at last week's conference in San Francisco." (Wall Street Journal, Aug. 27) . . . Kiplinger Washington Letter, just out, predicts that interest rates will slip further as worldwide jitters pull money here, edging rates downward.

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