Dow rises 39 as interest rates plunge

The Ticker

June 29, 1993|By Julius Westheimer

Stocks surged yesterday in the wake of sharply lower interest rates. As 30-year government bond yields fell to a 16-year low of 6.67 percent, the Dow Jones industrial average vaulted 39.31 points to close at 3,530.20. When interest rates fall, individuals and institutions snap up higher-yielding stocks instead.

WALL ST. WISDOM: "The only safe way of investing is through extensive diversification. Every investor is faced with constantly changing conditions. Hence, the only way to invest money conservatively is to diversify extensively." (From a yellowed clipping dated July 1, 1933) . . . "Hope is a great falsifier. Let good judgment keep her in check." (Baltasar Gracian)

MARYLAND MEMOS: Alex. Brown stock is listed under "Stock Market Correction Insurance" in Forbes, July 5 . . . Speaking of Brown, Kenneth Fisher, California money manager, says in the same Forbes, "Alex. Brown (22) is a great firm with a strong investment banking arm, yet sells at 1.2 times book value and has a P/E of 6.1. I may be wrong but it should hit 40 before this bull market is over. Legg Mason (26) is a similarly cheap Baltimore broker -- 1.3 times book value and a P/E of 7. And again, a price target of 40." . . . Martin Marietta stock reached a 12-month high (79 7/8 ) in last week's lackluster market. In the last 12 months Martin sold as low as 50 1/2 .

HOPEFULLY HELPFUL: "Discarding your automatic teller machine receipt at the bank may help thieves loot your account. High-tech bandits use video cameras to observe and record customers punching in their ID numbers at teller machines; then they match your number to the account numbers on receipts left behind." ("The Bank Book" by Edward Mrkvicka) . . . "Occupations expected to gain large numbers of jobs from 1990 to 2005 are, in order, systems analysts/computer scientists, computer programmers, child-care workers, receptionists and information clerks, registered nurses and nursing aides." (U.S. Bureau of Labor Statistics)

MONTH-ENDERS: "Tremendous cash influx into mutual funds may be good news for stock market investors in the short-term but I tell clients, 'Stay fully invested but keep the bulk of your money in conservative funds to protect against a downturn.'" (Sheldon Jacobs, "The No-Load Investor.") . . . The Kiplinger Washington Letter says that those people making over $250,000 a year will be certain to pay 39.6 percent income tax, effective July 1, but "blended rates" will apply to all of 1993, around 35-36 percent . . . "If you take the money out of your firm's tax-sheltered 401(k) plan, you'll owe taxes on everything except the after-tax contributions. To preserve your benefits, leave the money in your former firm's plans or transfer it to the 401(k) of your new employer." (Tax Hotline)

NOTES & QUOTES: July, which begins Thursday, has historically been an "up" Wall Street month, rising 1.1 percent on average over the last 41 years . . . "A three-month U.S. $10,000 certificate of deposit earned 3.1 percent interest last September, compared with 9.1 for a comparable German security. But at maturity the U.S. CD was worth $10,077 -- the German one only $8,964. Reason: the dollar gained 12.5 percent against the German mark in that period. Lesson: Consider currency risks in non-U.S. trading." (Bill Staton's Money Advisory) . . . "These stocks are recommended by three or more newsletters that outperformed the Wilshire Index from January 1988 to May 1993: Airgas, Apple Computer, CML Group, Cabletron, Cisco Systems, Electronic Arts, Harcourt General, International Game Technology, Intervoice, Justin Industries, Newbridge Networks, Read Rite, Superior Industries, Synoptics, Westcott." (Hulbert Financial Digest)

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