Dow loses 15 for 6th consecutive drop

The Ticker

April 27, 1993|By Julius Westheimer

Falling for the sixth consecutive day, the Dow Jones industrial average edged 15.40 points lower yesterday, closing at 3,398.37. Airlines, rails, utilities and over-the-counter issues also registered losses.

WALL ST. WISDOM: "The big picture tells us that over the last 70 years stocks have provided their owners with gains of 11 percent a year, on average, whereas Treasury bills, bonds and CDs have returned less than half that amount. In spite of all the great calamities that have occurred, owning stocks has continued to be twice as rewarding as owning bonds." ("Beating the Street" by Peter Lynch, a "must" book for all investors and non-investors.)

MONEY NOTES: In response to many requests, here once again is the phone number for Bankcard Holders of America, a nonprofit organization which, for $4, will send you a list of the lowest-rate credit card issuers in the U.S.: Phone 1-703-481-1110. . . . "If you have 10 years to retirement and now earn $40,000 a year, you will need $170,000 in savings at retirement. If you have 20 years to retirement, you'll need $252,000. Assumptions: 4 percent inflation, 8 percent return." (Consumer Reports, May) . . . "Worst mistakes investors make include taking high-rate-of-return risks, trying to time the market, not monitoring your holdings and being embarrassed to invest small amounts of money." (Lawrence Krause, author of "The Money-Go-Round: How to Get On and Off," $14.95)

BALTIMORE BEAT: "The current 2.9 percent stock yield is within 10 percent of its historical low but with the current low level of interest rates, this high valuation level may not be so ominous." (Smith Barney, via Rick Faby) . . . "If you had invested $10,000 in Baltimore Gas & Electric stock 13 years ago you would now have almost twice as much value ($49,000, including dividends) as you would have in a 14 percent CD ($26,800, including interest)." (Brokerage firm letter, "The Power of Utilities") . . . The highest money market account yields are now at Custom Savings, Eastern Savings Bank, Loyola Federal and Maryland National Bank, according to "100 Highest Yields." . . . "MBNA Corp., a bank specializing in credit-card loans spun off from MNC Financial (Maryland National Bank) has been the most profitable of the nation's big banks for two years in a row because of the lofty rates it has been able to charge credit-card customers." (Business Week, May 3)

SPRING SHOWERS: "With interest rates at very low levels the Ginnie Mae has emerged as a higher yielding instrument when compared to most other investments. It has a guarantee backed by the federal government." (Middle/Fixed Income Letter) . . . "Money-market funds, short and intermediate-term bond funds, Treasury securities and pooled-income funds are safe alternatives now to maturing CDs." (Alexandra Armstrong, Washington-based financial planner) . . . "If you're going to cash in securities to help pay for your child's education, sell them before Dec. 31 of his/her junior year of high school. Reason: Capital gains are considered income and will reduce your eligibility for financial assistance." ("The Baby Boomers' Money Manual," $12.95) . . . "Bonds often move in the same direction as stocks-- up and down -- and when both do well, stocks will usually outperform bonds. (Peter Bernstein in Forbes)

WATCHING WALL ST.: Comment last weekend ran 70 percent bearish. Herewith, a sample: "The Clinton economic program is a high- risk gamble with the economy and your investments. The first move should be to sell most bonds. Interest rates have fallen as much as they can." (Bob Carlson's Retirement Watch) . . . "With short-term rates of 3 percent and inflation at 4 percent or more, the Fed has pushed rates as low as it can." (LaLoggia Special Report) . . . "A major stock market decline will unfold from May into a June cycle low." (CS Technical Investor) . . . "Although the stock market has not yet had a major setback, tobacco and medical stocks have had their own full-fledged bear markets. The next stage could be 'wholesale massacre.' " (Pad System Report) . . . "With analyst downgrades out of the way, earnings reports will become positive, giving stocks an upward bias." (Wall Street Generalist) . . . "We now look to a rally that should take the Dow to around 3,500." (R.H.M. Survey) . . . "As long as investors are this skittish, the bull market has farther to run." (Cabot Market Letter) . . . "I would stay away from the broken growth stocks of the 1980s, including the tobaccos and drugs. In the financial area I like Wells Fargo, Bank of America and Merrill Lynch." (Martin Zweig)

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