Stock prices spurt early, then hang on

The Ticker

May 11, 1993|By Julius Westheimer

Fading in late trading, stock prices managed to hang onto minor gains yesterday. The Dow Jones industrial average, ahead almost 30 points at lunchtime, added only 6.09 points and closed at 3,443.28. At the closing bell yesterday the Dow stood about 1 percent below its all-time peak.

WALL ST. WISDOM: "Stocks in world-class major drug companies have been bashed and battered for the wrong reason. Stocks like Merck, Bristol Myers-Squibb, Pfizer, Sandoz, etc., have fallen 25 to 40 percent in 18 months. Fear of what President Clinton will do to drug prices has been the primary factor in the plunge. The fear is out of touch with reality. Over the next two years these stocks should recover and go on to new record highs." (Dessauer's Journal)

Regarding the above, my father, a New York Stock Exchange member, once told me: "Son, one dollar invested on 'Black Friday' is worth 10 dollars on any other day." This certainly seems like "Black Friday" for the drug stocks.

HOPEFULLY HELPFUL: Want to create an "instant stock portfolio" for yourself? If so, buy a few shares of several companies' stocks, then join a dividend reinvestment plan (DRP). To do this, according to an article, "Big Ideas For a Little Money," in Kiplinger's Personal Finance Magazine, June, you should join the Low Cost Investment Plan of the National Association of Investors Corp. (1515 E. Eleven Mile Road, Royal Oak, Mich. 48067). The story says, "It's smart because you can buy initial shares in over 100 companies without paying broker commissions. And after that first share, most firms with DRPs will sell you more shares directly -- without commissions. Write NAIC for details, costs, etc."

MARYLAND MEMOS: The Rouse Co. is written up at length in "The Patient Investor," April 23. Excerpts: "After a long dry spell Wall Street now looks positively upon real estate, and this sector was one of the best-performing industries in the first quarter. We remain enthusiastic about Rouse. Fiscal 1992 exceeded our expectations, the company has improved its financial position substantially and a leading consulting firm believes the market value of its real estate exceeds $25 a share, approximately a 40 percent premium to the current stock price." . . . In last week's lackluster stock trading, these local stocks reached 12-month highs: Petroleum & Resources, Polk Audio and Martin Marietta.

WORKPLACE WISDOM: Some tips from Inc. magazine, May: "In negotiations it's important to remain 'unconditionally constructive.' Assume the best of the person you're disagreeing with . . . If you tell your customers to pay promptly so you can meet your payroll, rumors could go out that you're in a cash-flow bind. Instead, explain to customers that any growing business needs cash, and never mention it again . . . When business is slow, don't take a job you're not an expert at. Unhappy customers may never pay you. Instead, do more of what you're good at." . . . The National Business Employment Weekly, May 7-13, runs a good story, "Jump-Start Your Career by Taking on New Risks." ("Those most successful often have had the courage to leap to something different . . . Calculated risks often pay off . . . Continually aim to be the best at what you do; this way you'll be qualified to leap when opportunity knocks.")

STOCK WATCH: "The market will go up from here because there's so much pessimism around and interest rates are low. I like Merrill Lynch, General Motors and Paramount Communications." (Martin Zweig) . . . "There's enormous cash on the sidelines, so I'm bullish. One hundred billion dollars in CDs mature this month and much of that will go into stocks. I like Allegheny Ludlum, Apache and Royal Dutch." (William Waters) . . . "The current position of our four primary stock indicators allows for additional gains during 1993 with the DJIA 3,500-3,700 range a reasonable target over the next six to nine months." (Bob Brinker's Marketimer) . . . "We cannot be sure if the final bull market high has been seen, but if the 3,499.73 intraday high of April 19 was not the final top, it is unlikely that the final high will be more than 1 or 2 percent above it." (Jerry Favors Analysis) . . . "Stocks appear to be on their last leg, facing a dismal 1993-94 even if the recent strong energy sector were to help push the Dow to one more upside breakout. Recently deteriorating technical numbers hint at a much more reliable break soon under 3,300." (Inger Letter) . . . "Sharp drop in the percentage of bullish advisers has brought it back to where it was on Oct. 30, 1992, and this is more evidence a big drop now is a low probability." (Investors Intelligence)

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