Kodak's $2.625 advance helps raise Dow by 9.68

The Ticker

June 15, 1993|By Julius Westheimer

Blue-chip stocks gained a modest 9.68 points to finish at 3,514.69 in slow trading yesterday as investors awaited today's release of the Consumer Price Index to see whether inflation slowed in May. A $2.625 gain in the share price of Eastman Kodak accounted for half the gain in the Dow industrials.

UNIQUE ANGLE: Responding to several requests, here, updated, is how the "Dow 5" stock strategy works. List the 10 Dow Jones stocks with the highest yields -- historically, those 10 issues far outperformed the Dow average as a whole. (The Wall Street Journal lists the Dow stocks daily and its stock columns give yields.) Then buy the five of the 10 with the lowest prices -- low-priced stocks tend to outperform higher-priced ones -- and hold them for one year, adjusting your list to the same strategy every year. Results: In the past 19 years, while the 30 Dow stocks had a total return (gain plus income) of about 300 percent, the "Dow 5" strategy produced a whopping total return of 3,300 (!) percent, six times better than the Dow average itself.

NOTES & QUOTES: "Consider this: $9,000 invested 10 years ago in McDonald's stock would today be worth $50,000. The same amount stashed away in CDs would have grown to a measly $17,540. Stated another way, the original $9,000, just enough to fund a year's tuition at any top college at the time, would today pay for more than two years at Harvard -- despite a roughly 50 percent increase in tuition fees." (Black Enterprise) . . . The above reminds me of this surprise: 12 years ago, you could have bought 30-year U.S. government bonds and enjoyed 15 percent interest (free of state taxes) for the last 12 years and for the next 18. Sometimes it pays to do the uncomfortable thing.

HOPEFULLY HELPFUL: Second-quarter estimated Federal and Maryland taxes must be postmarked by midnight tonight . . . Fortune, June 28, runs a good story, "Times Are Good? Create a Crisis," subtitled, "That's What Pepsi, Ameritech and Progressive Are Doing to Shake Up Their Fat, Happy and Profitable Organizations Before It's Too Late." ("Smart managers don't wait for crises to overtake them; they see them coming and get everybody scared.") . . . Forbes, June 21, runs a thoughtful piece, "Eternal IRAs." Excerpts: "If you want your IRA to compound tax free after your demise, make the right moves before you turn 70 1/2 . . . If you're married and only modestly affluent, pick your spouse as heir. If you have an estate over $3 million, consider skipping your spouse in favor of children or grandchildren."

MID-MONTH MEMOS: "When traveling on business, ask the bellhop to accompany you to your hotel room. Avoid ground-floor rooms. Know how to reach the desk in an emergency." (Dollar Stretcher) . . . For a free booklet, "Fifteen Money Blunders and How to Avoid Them," write Aetna, 151 Farmington Ave., RWAC, Hartford, Conn. 06156 . . . "The 401[k] and 403[b] plans, named for the sections of the Internal Revenue Code that allow them, are the most powerful savings tools available. Contributions and earnings grow untaxed, and some employers sweeten the pot. Typically, a worker can set aside up to 15 percent of his or her salary, pretax, up to a maximum of $8,994 this year." (U.S. News & World Report in a special retirement issue, June 14) . . . Business Week, June 21, is just out with a cover story, "Where To Invest," plus other good articles. For $2.75 this edition is worth buying.

STOCK WATCH: "Aggressive growth stocks [the Nasdaq industrials] look like they are on the verge of resuming their strong advance, and energy stocks should continue their strong recovery." (Deemer Technical Research) . . . "My expectation of a summer rally followed by a decline this autumn continues. However, if the market advances smartly into the June options expiration date, we could see a sharp correction thereafter." (The Prudent Speculator) . . . "May and June have historically tended toward stock weakness. I'm not expecting powerful upside action in the near future." (Scientific Investment, Baltimore) . . . "Over the last few months, we have profited from the declining U.S. dollar by focusing on international funds. But now the dollar is reversing and likely to start appreciating and therefore we recommend the sale of some international funds." (Wall Street Detective) . . . "About 60 percent of the hotel/motel operators are in the red, but a few sleepers are starting to wake up. One company we expect to do well is Marriott, now the world's largest hotel operator. Its occupancy rates are 10-15 percent above the industry average." (Joe Doyle, Sr. Research Analyst, Smith Barney)

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