Two-day loss erases 81% of Monday's Dow surge

The Ticker

September 17, 1992|By Julius Westheimer

Buffeted by turmoil in foreign exchange markets, the Dow Jones average fell eight more points yesterday, closing at 3,319.21. Combined with Tuesday's 49-point plunge, the two-day loss has erased 81 percent of Monday's 70-point surge that followed Germany's tiny interest rate reduction.

AFTER THE PLUNGE: Following Germany's dramatic, long-awaited cut in interest rates, we have heard or read these Wall Street comments: "The German interest rate reduction means growth, growth and more growth of worldwide economies, and that's bullish for stock and bond markets." (Rob Brown, Ferris, Baker Watts) . . . "We had been hoping for an interest rate cut abroad, so now's the time to reduce cash positions and put the money to work in stocks." (Peter Canelo, strategist, County NatWest) . . . "With interest rates falling abroad, the Fed has more breathing room here at home." (Thomas McManus, Morgan Stanley)

MORE COMMENT: "The best time to invest is whenever you have the money. The difference between the best time and the worst time is a scant 1 percent. By the year 2000, there's a 50-50 chance that the Dow Jones average will rise above 6,000." (John Templeton, one of the world's most successful mutual fund managers) . . . Duty Free International stock, widely held locally because of its Glen Burnie main facility, is written up favorably in Dick Davis Digest, Sept. 14. ("We estimate earnings of $1.20 a share for fiscal 1993 and $1.65 for the next year and feel DFI could trade at 41, suggesting a gain of 71 percent.")

MIDMONTH MEMOS: Tomorrow night, "Wall Street Week With Louis Rukeyser" spotlights Peter Lynch, retired ex-manager, Fidelity Magellan Fund, with panelists Laszlo Birinyi, Harvey Eisen and Monte Gordon. For the 10 years ended 1990, Fidelity Magellan topped the list of growth stock mutual fund performers. . . . "A Complete Guide to Finding a Job at a Small Company" in this week's National Business Employment Weekly is worth reading. ("80 percent of new jobs will be at firms with 100 or fewer employees.") . . . Top local money-market interest rates this week are at Custom Savings, Maryland National Bank and Chevy Chase Savings. (Data from "100 Highest Yields.") . . . Good autumn reading: "Scrooge Investing" by Mark Shousen, $19.95, and "1,001 Ways to Cut Your Expenses" by Jonathan Pond, $8.

ANOTHER STRATEGY: On the heels of Tuesday's Ticker, in which we outlined the U.S. News & World Report (Sept. 14) strategy of buying the 10 highest-yielding Dow Jones stocks each year (18-year results: up 1,926 percent vs. Dow Jones industrials ahead 516 percent), today we describe another unique technique from the same source. Called "the flying five," this strategy is built on a portfolio composed of the five lowest-priced Dow stocks among the 10 highest yielders mentioned above.

"Again," the article advises, "you purchase equal dollar amounts of each stock and hold them for a year, then reconstruct the portfolio on the same principle. Result: The low-priced five vaulted 3,292 percent (no misprint), or 20.4 percent a year, from 1973 through 1991 vs. Dow Jones industrials' climb of 516 percent.

"Reason: When cheaper stocks rise, they climb more in percentage terms."

SEPTEMBER SONGS: The latest Kiplinger Washington letter feels that defense reductions will continue for another five or six years, mostly in weapon systems, fighter planes, ships and submarines. The letter indicates that Maryland will suffer a big impact, along with other coastal states. . . . Mutual Fund Forecaster, Sept. 10, lists these funds under "Best Buy Recommendations": 20th Century Ultra, Janus Twenty, Kaufmann, Financial (Industrial Income), Monetta and Fidelity Low-Priced Stock Fund. . . . "Treasury bill rates, now below 3 percent, stood at 9.03 percent in 1989. They are down 68 percent from their peak, the largest percentage drop in rates (without a big counterrally) in the past 75 years." (Zweig Forecast) . . . "Stocks with Earnings, Dividend and Return-on-Equity Support" in Standard & Poor's Outlook, Sept. 9, include American Home Products, Bristol-Myers Squibb, General Electric, Kimberly Clark, Nike, Price Co. and Waste Management. . . . "If someone phones your hotel room from the 'front desk,' announcing he or she is sending up a maintenance man to fix a leak, phone back and verify the call before letting anyone in." (New York Times) . . . "Probably nothing in the world arouses more false hope than the first four hours of a diet." (Bits & Pieces) . . . "When all else fails, read the instructions." (CNN News) . . . "Never write down your bank card identification number, certainly not on your card." ("Your Bank: How to Get Better Service" by Jeff Davidson.)

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