Lynch's simple advice: Buy stocks of good firms

The Ticker

May 27, 1993|By Julius Westheimer

The Dow Jones industrial average surged 23.53 points yesterday to close at an all-time high of 3,540.16, eclipsing the previous peak by 17 points. Sharply lower interest rates sparked the advance as investors shunned low-yielding CDs, T-bills, etc., and plowed money into stocks.

WALL ST. WISDOM: "Don't worry about government economic reports, the Federal Reserve Board Index, the Consumer Confidence figures, the level of the stock market, the direction of interest rates or anything like that. Just keep buying stocks of high-quality companies which produce products the public consumes and which raise their earnings and dividends every year, and you'll come out just fine." (Peter Lynch, former portfolio manager, Fidelity Magellan Fund, at a private dinner about two years ago.)

MORE ON LYNCH: "Who wants stodgy dividends when capital appreciation is more exciting? Peter Lynch, for one. Dividends are more reliable than capital gains. Think of dividends as the tortoise and capital gains as the hare. The tortoise often wins. If you can find stocks that are pretty sure to raise dividends steadily, you'll have a tortoise that runs like a hare." ("Tortoises That Act Like Hares," Forbes, June 7.) The article lists these and other "rising dividend" mutual funds: USAA Income Stock, Capital Income Builder, John Hancock Sovereign Investors, Franklin Rising Dividends and Pilgrim MagnaCap.

LOCAL SCENE: Lyle Benson, CPA at Coyne & McLean, sends along a useful article, "CPA's Value Can Go Well Beyond Taxes," which he will mail if you phone him at 825-8300 . . . Alex. Brown's "Selected Investment Opportunities -- May 1993" include Allied Group, Browning Ferris, Countrywide Credit, First Interstate Bancorp, Merck, NovaCare and Time Warner. Phone 727-1700 for your copy . . . Baltimore Security Analysts Society will be host to the UNUM Corp. and its chairman and CEO, James Orr, at the Hyatt Hotel, June 3 at noon . . . Overheard: Grandson to grandfather, "Gramps, can you make a noise like a frog?" Grandfather: "No, why?" Grandson: "Well, Mommy says that when you croak we can all go to Disney World for two weeks."

MORE ON BALTIMORE: When I asked a local Pizza Hut manager why his eatery now serves Coca-Cola instead of Pepsi -- even though Pepsico, the parent of Pepsi-Cola, owns Pizza Hut -- he replied, "Coke gives us better service." . . . T. Rowe Price stock is recommended under "Attractive Asset Management Stocks" in S.& P. Outlook, May 19. ("Dividends have jumped 81 percent since 1989. Now selling at a modest 17 times our 1993 earnings estimate despite a 38 percent gain from the 1993 low, the stock is attractive for appreciation."). . . Washington Gas Light is listed under "Appealing Higher-Yielding Stocks" in S.& P. Outlook, May 26.

WORKPLACE WISDOM: National Business Employment Weekly, May 21-27 issue, runs a good story, "How To Answer Help-Wanted Ads More Effectively." Excerpts: "To prevent your resume from disappearing in that 'great circular file in the sky,' make the extra effort to target your resume and cover letters to specific employers . . . Letters that address contact persons by name are more effective than those that don't . . . Tell why you're interested in the company, why the employer should be interested in you and ask for a meeting to discuss your mutual interests . . . If you've worked for highly respected firms, give their names . . . Quantify your accomplishments, like, 'I increased territory sales by 50 percent in one year.' "

MONTH-ENDERS: BusinessWeek, May 31, runs a worthwhile cover story, "You Can Do It! How Individual Investors Beat Stock Market Pros At Their Own Game." Excerpts: "Don't over diversify . . . Keep a large chunk of your assets in growth stocks . . . Start with what you know (Winn Dixie, Office Depot, etc.) . . . Speaking of stocks, here are recent observations: "Once again, the economy is causing concern among investors. Recent reports have suggested that the economy is slowing down and inflation picking up. While the 1970s experience shows that 'stagflation' is not good for stocks, the present danger appears relatively small." (Hamilton Investments) . . . "If Clinton passes his energy tax bill intact, a relatively short but dramatic 5 to 10 percent market decline would likely occur. This would be followed by a long, steady upward trend." (OTC Growth Stock Watch) . . . "Sell long-term [30 year] Treasury bonds, hold long-term corporate bonds with yields of 9 percent or better, but keep only government bonds that mature in five years or less." (Dessauer's Journal)

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