Following Tokyo and London stock markets downhill, the Dow Jones average lost 31 points yesterday, closing at 3,277.61. With the Nikkei index at a six-year low and down 61 percent from its high -- and the Dow indicator only 4 percent below its peak -- investors appeared worried that Wall Street might trace the Nikkei's plunge.
HOPEFULLY HELPFUL: "The best investment is in smaller stocks of good companies that sell at steep valuation discounts to the overall market." (Kenneth Fisher, Forbes, Aug. 3) . . . "Investors looking to replace returns they have lost in their money market accounts and CDs should consider Baby Bell stocks." (R. S. Salomon Jr., chairman, Salomon Bros. Asset Management.) . . . "We are extremely bullish on small-capitalization stocks." (MPT Review) . . . Now, more than ever, U.S. Savings Bonds are an attractive investment, guaranteeing a minimum 6 percent interest rate vs. 3.33 percent on T-bills. Both have no state, local taxes.
WALL ST. WATCH: "Global markets are tracing an intermediate-term decline, part of a long-term bear market." (CS Technical Investor) . . . "Short and long-term trends remain up, but upside potential remains very limited." (Peter Dag Letter) . . . "Don't fight the lowest discount rate since 1963; we're 75 percent invested in stocks." (Ned Davis Strategy) . . . "Evidence mounts that a summer rally is under way." (Faxions) . . . "Conditions are in place for the market to do the unexpected -- a late summer rally up to near the yearly highs." (Wall Street Generalist) . . . "Fed's recent discount rate cut is bullish, as are monetary indicators in general." (Zweig Report)
SUMMARY: Regarding the above, of about 35 investment newspapers, newsletters, magazines, columns, brokerage reports, etc., that I read in the past week, about 65 percent were optimistic on the near- and long-term stock market outlook.
ELECTION EVIDENCE: "The theory that the Republican Party is the friend of business and that the Democrats aren't is widely believed but stock market behavior does not confirm this theory. Over 70 years, 1921-1991, annual rates of return (gain plus dividends) of the S. & P. 500 stock index have not been significantly different under Republican administrations than under the Democrats. If past is prologue, expect stock returns to average 13 percent a year and the political party in power won't make much real difference." (Wall Street Journal)
MONEY SAVERS: "Here's a gift from the Internal Revenue Service: It's now OK to add a weekend to a business trip and use the time for pleasure without jeopardizing your boss' tax deductions or owing tax on the part of your travel reimbursement that applies to the personal time. While it may sound like the IRS is slipping, the rationale makes sense. The new ruling is intended to help employers coax you into staying over a Saturday night so they can get a sharply lower airfare. And while the ruling deals only with employees, accountants say self-employed people can probably follow it." ( U.S. News & World Report, July 27) . . . "No bond fund is as safe as your savings account. Before plunging in, remember that higher yield always invokes higher risk. Unlike CDs and money funds, which promise to preserve your principal, bond funds fluctuate in value." (Fortune, July 27)
JULY JOURNAL: Tomorrow night, "Wall Street Week with Louis Rukeyser" looks to Northwest investment opportunities with guest Alan Folkman and panelists Eddie Brown, Mary Farrell and William Gross . . . I will answer your financial call-in questions -- anywhere from $500 to $500,000 -- on WBAL-TV (Channel 11) Saturday at 8 a.m. . . . A Baltimore radio personality had his car stolen from BWI's satellite parking lot three months ago, only to have it returned to virtually the same spot last week with nothing missing. . . . "The average stock mutual fund fell 2.6 percent in the last quarter, the worst quarterly performance since a 15.2 percent drop in third quarter 1990." (USA Today) . . . "If Ross Perot's $3 billion were applied against the national debt interest, it would last only five days." ("This Week with David Brinkley")