Dow surges 445% from 1960 debates

Julius Westheimer

October 01, 1992|By Julius Westheimer

After the Dow Jones industrial average edged up five points yesterday to close at 3,271.66 -- and with presidential debates in the headlines -- I dug back and found that when Richard M. Nixon and John F. Kennedy held their famous October 1960 TV debates, the Dow index hovered around 600, thus advancing 445 percent in 32 years.

LOCAL HONOR ROLL: "John Rogers, a top money manager with super long-term performance at Ariel Capital Management, has been buying stocks Wall Street loves to hate -- commercial real estate. His choice is the Rouse Co., a Baltimore developer of glitzy shopping malls. Rouse shares are trading at less than half their 1989 prices. The company's stock plunged in 1990 when the recession hammered retail-intensive real estate developers but Rogers insists that Rouse refrained from overbuilding during the overheated 1980s, resulting in 90 percent occupancy rates. That's why Rogers thinks Rouse is poised for a return to profitability, viewing the 1993 value of the firm's assets at $27 a share, about twice the current share price." (Business Week, Oct. 5.)

WALL ST. WATCH: "Cycles are extended and positioned for a steep fall. There is only one place to be: Short or in cash!" (Paradigm Opinion) . . . "Tremendous economic and social gains lie ahead. This is what the stock market has been telling us." (Wheat First Securities) . . . "There is considerable evidence of serious technical deterioration that leads us to believe that stocks remain dangerously poised for a major decline." (Inger Letter) . . . "We are buyers again, beginning week of Sept. 28. The next six weeks hold some of the strongest up cycles in years. Blessings and joy!" (Crawford Perspectives) . . . "Let me assure you that severe bear markets do not start except in periods of over-optimism. Nobody can say this is a period of great optimism." (John Templeton.)

ENTER OCTOBER: "While there's no question that the market is at risk, overvalued by all historical valuations from price-earnings and dividend yield to book value, conditions are not in place for a major market top or the beginning of a bear market." (Sy Harding Investor Forecast) . . . "U.S. stocks will not plunge. A year from today the Dow is more likely to be higher than lower." (Dessauer Journal of Financial Markets) . . . "Even considering recent declines, they mark an interruption of the bull market rather than the start of a bear market." (Alfred Goldman, A. G. Edwards & Sons).

SUMMARY: Of about 35 newsletters, periodicals, newspapers, etc., that I read in the past week or so, 60 percent were optimistic. But despite prevailing optimism, Barron's (Sept. 28 fTC issue, on newsstands this week) reports that the S&P 500-stock price-earnings ratio stands at 24.3 times earnings, about 50 percent over the historically normal P/E ratio. Optimists claim that relatively high P/E ratios are justified by low inflation rates.

WORDS OF WARNING: "So inaction will be advocated in the present even though it means deep trouble in the future. Here lies the threat to capitalism. It is what causes men who know things are going quite wrong to say that things are fundamentally sound." (Last words in "The Great Crash: 1929" by John Kenneth Galbraith.)

MARYLAND MEMOS: Tomorrow night the question on "Wall Street Week With Louis Rukeyser" is "Should You Short the Torts?" with answers by guest Michael Frinquelli, managing director, Salomon Bros., and panelists Ralph Acampora, Gail Dudack and Michael Holland. . . . Tuesday, Oct. 6, Baltimore Security Analysts' meeting hears Servicemaster's Robert Keith, chief financial officer, at Sheraton Hotel downtown at noon. Looking ahead, Oct. 14, Hechinger; Oct. 27, Black & Decker. . . . Gary Hornbacher, Marketing Creative Services, Lutherville, writes, "The Baltimore County Library, Towson, offers the public access to four personal computers which can be used for investment research, with a trained staff to help. Phone 887-6166 for details." . . . "Not all indicators are unfavorable for President Bush, the most favorable being that interest rates are in a steady downtrend, historically good news for the party in power." (Smart Money, Oct.). . . "Shop now for 10-year mortgages." (100 Highest Yields) . . . "Time is running out. No nation can run huge deficits year after year and escape the consequences." (Dessauer Journal) . . . "Success or failure in business is caused more by mental attitude than by mental capacities." (Bits & Pieces) . . . "You will never find time for anything. If you want time you must make it." (Charles Burton.)

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