Falling for eight of the last nine days in what one local broker calls "Chinese water torture," the Dow Jones industrial average slipped 2.43 points yesterday to close at 3,413.50.
But in President Clinton's first 100 days, the Dow is up 171 points, or 5.2 percent.
TAKE YOUR CHOICE: "In the rest of the 1990s, stocks and bonds will not even come close to repeating their gains of the last decade. The most bullish stock market forecast among all the services I monitor is for a 6 to 8 percent average annual return, much less than stocks' long-term historical average of 10 percent per year. And remember, that's the most bullish forecast." (Mark Hulbert, editor, Hulbert Financial Digest, which monitors performance of investment advisory letters, in Forbes, May 10) . . . The latest Kiplinger Washington Letter (April 23) suggests that investors consider stocks, feeling that stocks will provide an annual total return near 10 percent over the long haul.
MONTH-ENDERS: May, which arrives day after tomorrow, has historically been a slight Wall Street loser over the past 41 years, edging down an average of 0.1 percent. . . . Barron's, April 26, on newsstands this week, runs its quarterly mutual fund section, 64 pages jampacked with useful facts and figures. Top winners for last 10 years, in order: Merrill Lynch Pacific, CGM Capital Development, Prudential Utility, Fidelity Magellan (see below) and New York Venture. . . . Tomorrow night, "Wall $treet Week With Louis Rukeyser" is host to Jeffrey Vinik, portfolio manager, Fidelity Magellan Fund, and panelists Frank Cappiello, Monte Gordon and Michael Holland.
HOPEFULLY HELPFUL: Advantages of a 401(k) plan vs. an IRA: 401(k) has an annual contribution limit of $8,994 (subject to plan limits) vs. IRA $2,000 annual limit. Deposits in a 401(k) can be made through convenient payroll deduction; deposits in an IRA are usually made by single deposit. 401(k) allows hardship withdrawals for major medical expenses without penalty vs. IRA imposes a 10 percent penalty on withdrawals prior to age 59 1/2 . The 401(k) gives immediate tax reduction (tax withholding is reduced) vs. IRA gives deduction when return is filed. See your broker, banker or employer for details.
IT'S YOUR MONEY: "Best source of low-cost loans for investment purposes: your stock broker. Brokers lend money at the broker's call rate -- usually 1/2 to 1 percent below prime rate. Collateral required: marginable securities in a margin account." ("Scrooge Investing" by Mark Skousen, $19.95) . . . A tax-free yield of a 5 percent equals a 5.9, 6.9 and 7.2 percent taxable federal equivalent in the 15, 28 and 31 percent brackets, respectively. For a 6 percent yield the figures are 7.1, 8.3 and 8.7 percent, respectively. State income taxes would make the taxable equivalent yields still higher. (Data from Consumer Reports)
NOTES & QUOTES: "Before renting a car at an airport in an unfamiliar city, make sure you know the best route to your hotel. To find out the shortest route, buy a map in advance of your trip and highlight the best roads to take. Call the local police department for areas to avoid." ("The Danger Zone: How To Protect Yourself" by Patricia Harman, $7.95) . . . "When buying stock directly from a company or through a dividend-reinvestment plan (DRIP), pay attention to the date when the company actually invests your money each month. Checks that arrive early sit and wait without drawing interest." (DRIP Investor Newsletter by Charles Carlson, Hammond, Ind., $79 a year) . . . Locally, Allied Irish stock (parent of First National Bank) reached a 12-month high earlier this week in a generally "down" market.
WATCHING WALL ST.: "Look for companies which have reported consistently strong fundamental earnings gains but whose stocks have tumbled only because results didn't reach hyper-expectations of analysts." (OTC Growth Stock Watch). . . "Interest rates are in the process of making long-term lows. We therefore suggest that investors focus on the short-term bond sector as the place to invest. Specifically, we suggest three-year corporate bonds." (Courtney Smith's Strategic Edge) . . . "The idea of the entire market going up or down, as in the first 100 years of the stock market, no longer is valid. What we're now seeing in group rotation may mitigate any major decline in the Dow Jones averages as a whole." (Pro Trade Letter)