Dow's whirl holds loss to 22 points

The Ticker

October 06, 1992|By Julius Westheimer

After a wild ride, the Dow Jones average closed only 22 points lower yesterday after plunging 104 points by midmorning. On heavy volume of 286 million shares, the Dow ended the woolly day at 3,179.00. Are lower stock prices ahead? Read on.

TAKE YOUR CHOICE: "If the Dow Jones average breaks down through 3,181.35, it could drop another 75 to 100 points." (Ralph Acampora, highly respected technician, on "Wall Street Week With Louis Rukeyser." Mr. Rukeyser to Mr. Acampora: "That exact number?" Mr. Acampora to Mr. Rukeyser: "That exact number." . . . Gail Dudack, also a highly respected technician, stated on the same program, "If the Dow falls through 3,100, then I'd worry."

TRUE/FALSE QUIZ: Answers below. 1) Two out of five people living today will enter a nursing home at some point in their lives. 2) Medicare will cover all of your long-term-care needs. 3) The average cost per year to stay in a nursing home is $25,000. 4) When you buy a long-term-care policy you can be assured that it will pay for home health care.

LOOKING BACK: Approaching the five-year anniversary of the Oct. 19, 1987, stock market crash (Dow Jones average down 508 points to 1,738.74), let's see which newsletters' recommendations performed best in that five-year period. According to Hulbert's Financial Digest (September), these newsletters (with Aug. 31, 1987, to Aug. 31, 1992, plus percentages in parentheses) topped the list: BI Research (196), OTC Insight (154), MPT Review (133), Investment Quality Trends (93), The Chartist (91), Value Line Convertibles (90), Medical Technology (86) and Zweig Performance Report (79).

LESSON LEARNED: Regarding the above, Hulbert comments, "We ranked 55 newsletters on the basis of their August 1987 to August 1992 performance. We also checked how each newsletter performed in October 1987 alone. There's very little correlation between an adviser's October crash month performance and his five-year record. The lesson to learn is how unhelpful it is to pick an adviser on the basis of short-term performance. (Ticker Note: All seven long-term top performers flopped badly during the month of October 1987.) For subscription data to this fine publication, phone 703-683-5905.

QUIZ ANSWERS: 1) True, and 13 weeks after a patient is admitted the spouse's financial base is generally destroyed. 2) False. Medicare defrays costs only for acute-care needs. 3) True, and current costs in the Baltimore-Washington area run about $36,500 a year. 4) False. Many policies do not cover home health-care costs, only nursing home care. (Material supplied by Linda Schwab, insurance specialist, phone 685-2600.)

BITS & PIECES: In last week's poor market (Dow Jones average off 50 points), these stocks reached new 12-month highs: American Stores, CBS, Colgate, Fruit of the Loom, Gillette, Loyola Capital, Pep Boys, PepsiCo, Sara Lee, Winn Dixie. (Note the number of foods, beverages and consumer products) . . . Barron's, dated Oct. 5 and on newsstands all week, runs its quarterly report on mutual funds. ("Third quarter gave a welcome life to mutuals. Top-performing funds were Merrill Lynch Investment & Retirement A and B, Fidelity Select Energy, 20th Century Giftrust and Century Shares.")

FALLING LEAVES: "Most stocks represent high risk; bonds offer attractive yields; neither presidential candidate will change the short term course of events, the winner having the unfortunate task of presiding over an economic decline that may last several years. It's not a pretty picture." (Rex Rehfeld, Gruntal & Co. Phone 727-0522 for his complete letter) . . . Harry B. Gorfine & Co. (539-5474) will mail a worthwhile tax report, "New Game for Lump-Sum Distributions." ("Rules are very complex and impose new burdens on plan sponsors and participants.") . . . National Business Employment Weekly (Oct. 2-8, on newsstands this week), runs a good story, "Why It's Never Too Late to Make a Career Change." ("Don't feel you're alone . . . You're probably unaware of all the opportunities for someone with your education and experience . . . Network vigorously . . . It's never too late to learn new skills.") . . . Personal Note: Regarding the above, I changed careers at age 45 and it was the best business decision I ever made. . . . "Investment Swindles: How They Work and How to Avoid Them" is yours free by writing Consumer Information Center, Pueblo, Colo., 81009 . . . "There are an estimated 32,000 Tupperware parties every day worldwide." (Harpers, Sept.) . . . "For the third quarter, just ended, the overall stock market was downright boring, with the S & P 500 index gaining only nine points." (New York Times) . . . "When a man says he has a clear conscience, it often means he has a bad memory." (Bits & Pieces) . . . "The more you say, the less people remember." (Leadership)

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