Plunging interest rates help stocks Dow up 3.51

The Ticker

March 04, 1993|By Julius Westheimer

As long-term interest rates continued to plunge yesterday, the Dow Jones industrial average extended its rally and edged up 3.51 points to close at 3,404.04. When interest rates fall, investors take money from low-yielding money funds and maturing CDs and buy higher-yielding stocks instead.

WHAT NEXT? "Recent new highs in the popular averages confirm anew that this is a bull market, now one of the longest-running uptrends in market history. Since the August, 1982 low, the S&P 500-stock index returned a stunning 545 percent from price appreciation and dividends." (Investor's Digest) . . . "This is not 1982, when stocks languished on the bargain counter. Rather, this an overpriced high-risk market that has very little upside potential and great downside risk." (The Chartist) . . . "It's worrisome that inside selling has increased sharply in the past few weeks." (Professional Tape Reader) . . . "The only person wise about the future is the person who keeps silent." (John Kenneth Galbraith)

MARYLAND MEMOS: Maryland is listed fourth under "Hardest Hit States Under Clinton's New Tax Proposals" in Fortune, March 8. Top hardest-hit states are Connecticut, New Jersey and New York . . . T. Rowe Price International Fund is now recommended by six newsletters followed by Hulbert Financial Digest . . . Baltimore Security Analysts focus on Federal National Mortgage Association on Thursday, March 11, Stouffer's Hotel at noon, when the speaker will be Paul Paquin, senior vice president and director of Investor Relations . . . Marvin Fribush, PaineWebber (576-3220), will mail his firm's "Inaugurating a New Investment Strategy." ("Update your objectives, review your current holdings, explode the myth that stocks are too risky for your investment portfolio.")

DIGGING DEEPER: Examining the above-mentioned myth, the PaineWebber letter gives these figures: Over 66 years $1 invested in 90-day Treasury bills grew to $11.01, in 30-year Treasury bonds to $21.94 and in the Standard & Poor's 500-stock index the same $1 vaulted to $675.59 (no misprint). Figures assume that all earnings have been reinvested. Data from Ibbotson Associates.

GETTING SOME NOW: Did you know that you may tap your retirement fund before you retire and escape taxation? Dollar Stretching Ideas says, "The way to get money before age 59 1/2 without a 10 percent tax penalty is to set up a schedule of 'substantially equal' payments spread over the rest of your life, based on your life expectancy." The story continues to say that if, for example, you have a 401(k) account with $75,000 in it, and your remaining expectancy is 25 years, you could cash in $3,000 a year -- but, once you set up a payment schedule, you can't change the per-year amount until you reach 59 1/2 . See your tax person for details.

READING LAMP: This week's The New Yorker (March 8) runs one of its rare business stories, a fascinating piece called, "Michael Milken's Biggest Deal." ("Before Judge Kimba Wood was publicly rejected for the post of Attorney General, she was vilified for reducing her 10-year sentence on Michael Milken, who goes free this week. Secret dealings between the government and Milken's lawyers -- which not even Judge Wood knew about -- help explain the puzzling denouement of America's biggest white-collar-crime case.") . . . The issue also includes a story on how Russell Baker, 67, a former Sun reporter, was chosen from among 600 applicants to replace Alistair Cooke as the host of PBS's long-running "Masterpiece Theatre."

MARCH WINDS: "Due to corporate downsizing and restructuring, 44 percent of currently unemployed men and women will not be getting their jobs back." (National Public Radio) . . . "The three key issues for 1993 are jobs, jobs and jobs." (Mercantile Safe Deposit & Trust Co. Economic Review) . . . "The credit card that charges the least amount of interest we could find was offered by Arkansas Federal Bank in Little Rock ([501] 227-5654). That bank charges 8 percent. With a good credit history, you can get credit to the usual limits." (Moneypaper, February) . . . "Mutual fund savings plans are ideal for building investments with as little as $25 a month. The investor authorizes a fund to transfer a set amount each month out of his/her checking account. More than 300 funds have these automatic-investment programs. Call the fund of your choice for an enrollment form." (No-Load Fund Investor) . . . "Each U.S. family's share of the deficit now comes to about $16,000." (CNN News) . . . The latest Kiplinger Washington Letter says that long-term interest rates will probably slide a bit, short-term rates should stay about where they are and that Wall Street will remain choppy through the summer months as Congress s wrestles with President Clinton's economic proposals.

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