Blue chips in modest gain

The Ticker

Dow up 8Blue chips posted a...

April 06, 1993|By Julius Westheimer

Blue chips in modest gain; Dow up 8

Blue chips posted a modest gain yesterday after Friday's plunge of nearly 70 points, led by a heart-stopping $14.75 fall in shares of Philip Morris Cos. The Dow Jones industrial average rose 8.38 points to close at 3,379.19. Philip Morris, which spooked the market Friday with its announcement of price cuts for its leading Marlboro cigarettes, managed to close up 50 cents at $49.875.

WALL STREET WISDOM:

Excerpts from Peter Lynch's new book, "Beating the Street": "Gentlemen who prefer bonds don't know what they're missing. Buy stocks! . . . Never invest in any idea you can't illustrate with a crayon. Have stocks that kids can explain, like Disney, Kellogg, Topps, McDonald's, Wal-Mart . . . When yields on long-term government bonds exceed the dividend yield of the S&P 500-stock index by six percentage points or more, sell your stocks and buy bonds . . . Even a healthy portfolio requires a checkup every six months or so."

BALTIMORE BEAT:

"T. Rowe Price New Asia Fund is one of our favorites. It invests in the fast-growing 'Asian Tigers' of the Far East, but not in the faltering Japanese stock market." (Marketimer, Princeton, N.J.) . . . These local issues reached 12-month highs last week: Allied Irish (First National Bank), PHH Corp., Martin Marietta, Rouse and Polk Audio . . . Thursday, April 8, Baltimore Security Analysts host Hugh L. McColl, Jr., chairman and president of NationsBank, Hotel Sheraton Downtown, at noon . . . Towson-based Merry-Go-Round is written up in Forbes, April 12. ("The firm has staged an impressive recovery from its fiscal 1992 disaster, which saw earnings plunge 41 percent and the stock drop from $21 to below $10.")

NOTES & QUOTES:

"For cheaper life insurance, switch underwriters every three to five years. Reason: Annually renewable term-policy premium payments increase yearly but a new company will start your policy at its low first-year rate." (Jonathan Pond, Financial Planning Information, Inc.) . . . "Some of the largest holdings in Warren Buffett's Berkshire Hathaway stock portfolio are Federal Home Loan Mortgage, Wells Fargo, Washington Post, Capital Cities/ABC, Coca-Cola, GEICO and Gillette. The stock now sells at around $12,000 per share; one year ago it was $8,100 and in the 1970s a share traded at $38 (no misprint) per share." (Dick Davis Digest)

START EARLY!

"If an investor put $2,000 a year into an IRA from age 41 through 50 and earned 8 percent a year, he or she would have accumulated $76,000 by age 65. A second investor who put the same amount from age 21 through 30, and who earned the same annual return, would have $490,000 at age 65, more than six times as much as the first investor, despite investing the same amount of money. These figures dispel the myth that starting an IRA can be left until later in life when you begin thinking about retirement." (Mutual Fund News Service)

SURPRISE ENDING:

Let's say that in 1981 you put $10,000 in a 10-year CD at 14 percent (!) or $10,000 in BG&E stock. Which did best? Answer: 10 years later your $10,000 in the CD would come back to you and interest would have been $14,000. Total: $24,000. On the other hand, your BG&E stock cost you $8 a share in 1981, giving you 1,250 shares. In 1991 BG&E sold for $23 a share, so your investment grew to $28,750 plus income of $16,100 (the firm raised its dividend in nine of those 10 years). Total: $44,850. You would have been $20,850 better off in BG&E.

WALL STREET WATCH:

"Look out below! Recent bond market strength signals a weak economy ahead and hard times for stocks." (Mark Hulbert, Forbes, April 12) . . . "Bristol-Myers Squibb offers quality and extraordinary value. Yielding 5 percent on a safe dividend that has a compound 18 percent annual growth rate, this A+ quality stock promises a rewarding total return." (Investment Quality Trends, Geraldine Weiss) . . . "We're very bullish short-term. Yields elsewhere are historically low; investors should become fully invested to take advantage of the next move higher." (Louis Navallier's MPT review) . . . "Caution is definitely a must. There are clear-cut signs of growing complacency concerning the market. Don't drop your guard; a close below DJ 3,449 signals trouble." (Professional Tape Reader) . . . "The investment theme 'stocks and bonds are the place to be' is conventional wisdom and, therefore, suspect." (Frederick Rowe, Jr., investment adviser) . . . "Stocks are richly priced but seem likely to stay that way for awhile. Maintain a steady-as-you-go-course." (S&P Outlook, March 31)

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