Watergate scandal hit Wall St. hard

The Ticker

June 18, 1992|By Julius Westheimer

Noting the 20th anniversary of Watergate, I dug back and found that the scandal ravaged Wall Street. After a brief run-up following the June 17, 1972, break-in (Dow Jones 945), the Dow sank sickeningly to a 577 low on Dec. 6, 1974, four months after Nixon resigned -- a 39 percent plunge.

Yesterday, the Dow fell 42 points to 3,287.76, off 67 points this week but up 2,710 points, or 470 percent, since the 1974 low.

MARKET WATCH: "The market is attempting record highs with Dow 3,500-3,600 by July not surprising. But investors beware! Market conditions are very dangerous." (Pinson's Investment Digest) . . . "The market will not have a major bull or bear run this year." (Courtney Smith's Strategic Edge) . . . "It's hard to take this market down a lot. With interest rates low, investors are pumping tons of money into stocks. By the way, Wall Street doesn't trust Perot." (Martin Zweig) . . . "Perot is thriving on our bad economy. Looking at Wall Street, I think stocks will dive." (James Grant) . . . "I'm an outright bull. Billions of dollars in dividend payments will soon flow into Wall Street." (Laszlo Birinyi)

DIFFERENT ANGLE: "Although the Dow has moved to new highs the New York Composite index failed several times to better its earlier peak. This shows that as money poured into Dow cyclicals, money was taken from many other groups. This means that there is little sideline cash as investors must sell one stock to buy another; without this cash cushion stocks could be vulnerable to a 10 percent or worse correction. Our managed accounts, 50 percent invested on April 29, were moved out of the market on May 7 when it was apparent that little upside potential remained." (The Financial Commentator, James Welsh.)

FATHER'S DAY FILE: As a teen-ager during the Depression I helped my Father on Saturdays in his stock brokerage office at 211 E. Redwood St. After the market closed at noon (it was open Saturdays until 1953), we lunched at the Southern Hotel cafeteria (35 cents) where Dad taught me many valuable lessons. Herewith, a few unpublished nuggets: "Son, over the years you'll learn more from people than from books. On a train, talk to important men and read your newspaper later . . . If you ever inherit or make a lot of money, have professionals manage it . . . But if you ever buy a stock on your own, learn all about the company first . . . A rich girl is just as good as a poor girl, but no better." (Although Dad died 36 years ago, I miss him more than ever and wish I had listened to more of his advice. Luckily, I made many notes of our conversations.)

LOOKING AHEAD: Tomorrow night, "Wall $treet Week with Louis Rukeyser" features "The Future of Biotechnology" with Denise Gilbert, Smith Barney's biotechnology analyst, and panelists Michael Holland, Carter Randall and Maceo Sloan. . . . "Money Matters" with Dean Witter's Larry Adam and Mr. Ticker airs on cable channels 44 and 17, respectively, in Baltimore and Baltimore County at 8 p.m., Tuesday, June 23. . . . Legg Mason's Gerald Scheinker (486-8010) will mail his firm's 34-page booklet, "Mid-Atlantic Bank and Thrift Quarterly." ("We continue to believe there are selected banks and thrifts which now represent good values.")

MARYLAND & MORE: Saturday will be the longest day of the year. . . . "If you had bought 100 shares of Wal-Mart Stores at its first public offering 15 years ago for a total of $1,650 you would now have 51,200 shares worth around $3 million." (Fortune, June 29) . . . "The tumbling Nikkei stock average has pulled down membership in some Japanese golf clubs from $391,000 to $200,000." (CNN News) . . . MNC Financial (Maryland National Bank) stock is listed under "Rising Stars" in S&P Outlook, June 10. . . . T. Rowe Price's Edward Mathias is pictured and written up at length in Financial World (June 23) ("Load up on reasonably priced growth companies with healthy businesses and good cash flows like Smithfield Foods, Ryan's Family Steak Houses, Interstate Bakeries and Silicon Valley Bancshares.")

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