Dow up 228% in 10 years

The Ticker

December 19, 1991|By Julius Westheimer

Edging up six points, the Dow Jones average closed yesterday at 2,908.09, up 275 points, or 10 percent, this year to date. Yesterday's close stands about 2,000 points above the Dow level 10 years ago this week (DJ 910), a healthy gain of 228 percent in a decade.

AND NOW WHERE? "Recession is likely to continue well into 1992, with lower interest rates. DJ should hold above 2,870." (Financial Commentator) . . . "Economic valley deepens; reduce stock exposure by half." (Astute Investor, Robert Nurock) . . ."Market has gas for another rally, carrying to DJ 3,100, but soon thereafter a 10 percent-plus correction is likely." (Personal Finance) . . . "Market is OK short-term, but I'm nervous about the 1992 economy; Fed easing hasn't helped." (Martin Zweig) . . . "I'm a long-term bull; this market has absorbed everything thrown at it." (Gail Dudack) . . . "I like Merck, Pfizer, Syntex; avoid IBM, autos, steels. Buy 30-year, 8 percent Treasury bonds and when rates drop to 4 percent you'll double your money and have 8 percent return while you're waiting." (Kenneth Heebner, chief, CGM Capital Fund, 1980s top performer).

HISTORY LESSON: "If '7' is lucky, Aug. 12, 1982, proved to be a very lucky day for investors. The Dow Jones average, yielding 7 percent, closed the day at the lowest point of the decade: 777. It was the buying opportunity of a generation for mutual fund investors. In the following nine years the average mutual fund quadrupled its shareholders' capital. Nine out of 10 funds tripled and an amazing 95 percent at least doubled." (Mutual Fund Forecaster) . . . "The stock market has risen 14.8 percent on average in the 22 presidential election years since 1900, and 20.4 percent in years when Republicans were in the White House." (Business Week).

LOOKING AHEAD: "President Bush should win handily if gross national product rises by 3 1/2 percent next year but faces close election if economic growth nears zero. Biggest threat to Bush is protracted double-dip recession in 1992. Republicans will probably opt for tax-reduction stimulus if economy doesn't revive by year end." (Yale University study) . . . "Long Treasury bond yields could drop to 7 percent during 1992." (Smith Barney, via Rick Faby) . . . "Short-term economic outlook remains gloomy with new wave of caution reflecting poor employment numbers." (Mercantile Safe Deposit & Trust Co.) . . . Latest Kiplinger Washington Letter (Dec. 13) feels that capital gains tax will be reduced because it's the centerpiece of Bush's recovery plan and is supported by many Democrats.

STOCKING STUFFERS: Tomorrow night, "Wall Street Week with Louis Rukeyser" is all about the toy industry and its stocks . . . S&P 500-stock price-earnings ratio now stands at 21.4 times earnings vs. 15 a year ago. DJ P/E is 29 vs. 14 this week in 1990. . . . "12 money funds listed in Barron's now yield less than 4 percent." (Grant's Interest Rate Observer) . . . Regarding the above, consider buying E savings bonds at 6.3 percent and 30-year Treasuries near 8 percent, both free of state taxes. . . . Top area insured CDs are at Custom Savings, Loyola Federal, Republic Savings (Rockville), Second National Federal (Salisbury), Chevy Chase Savings, according to "100 Highest Yields" . . . Legg Mason says, "Giant Food third-quarter earnings well below expectations." . . . "Although Fed has reduced rates to banks, strapped banks aren't passing on reductions to all borrowers." (U.S. News & World Report).

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