'Clinton rally' pushes Dow to record high of 3,576.08

The Ticker

August 10, 1993|By Julius Westheimer

In what brokers called a "Clinton rally," stocks surged to record highs yesterday. On the first trading day after Congress passed the president's deficit-reduction bill, interest rates on 30-year government bonds sank to a record low (6.46 percent), pushing the Dow Jones industrial average ahead 15.65 points to a closing peak of 3,576.08.

QUOTE OF THE WEEK: "If you think health care is expensive now, wait until you see how much it costs when it's free." (P. J. O'Rourke, The American Spectator.)

START YOUNG! "Becoming a millionaire is a more realistic goal than many youngsters realize. It doesn't take a huge salary or a lifetime of self-denial -- just a disciplined approach. If at age 18 you started socking away just $50 each month in a stock tax-deferred retirement account that compounds at 12 percent annually, you would amass $755,738 by age 60 -- and a whopping $1,377,000 by age 65. It's sad that most savings programs are started too late, and that most of us routinely squander $50 a month." (Bill Station's Money Advisory).

NOTES & QUOTES: "A significant change in Fed policy underlies Alan Greenspan's recent tough testimony to Congress. The Fed has decided to go on the offensive against inflation and has dropped its role as a market follower. All eyes should be on the bond market." (Forbes, Aug. 16) . . . "Here's my screen: Companies must have at least $100 million in revenues and expand sales and earnings at least 20 percent annually. I like 20 percent-plus profit margins. The last thing I look at is a stock's P/E ratio. People look at my fund's P/E, about 35, and ask, 'Isn't that expensive?' They forget that my stocks grow at a 40 percent rate." (Harold Ireland, manager, ABT Emerging Growth Fund, who bought Home Depot in 1988 at $4 a share.)

LOCAL LINGO: Legg Mason's August "Investor's Dozen" includes Baxter, Enquirer/Star Group, Fleet Call, Imo Industries, Instrument Systems, Monsanto, Porta Systems, Shawmut, Telefonos de Mexico, UST, Waban and Warnaco . . . Robert McDorman, formerly with Investment Counselors of Maryland and now manager of the Regis Small Company Fund ($71 million in assets) is pictured and written up in Forbes, Aug. 16 . . . PaineWebber's Marvin Fribush (576-3220) will mail his firm's latest Money Notes. ("This might be a good time to make adjustments and diversify assets, patiently and selectively. Also, investors should note that the 'window' is still open for zero-coupon Treasury bonds.") . . . T. Rowe Price, Signet, Laurel Bancorp and Provident Bank stocks hit new 12-month highs in last week's trading . . . Highest-yielding local money market accounts today are at Loyola Federal, Eastern Savings Bank and Maryland National Bank. (Data from "100 Highest Yields.")

MONEY-SAVER: "Mortgage lenders are peppering homeowners with letters urging them to sign up for biweekly mortgage payment programs that will save 'thousands, maybe even tens of thousands of dollars in interest payments.' In a biweekly plan, the bank debits half of your mortgage payment from your checking account every two weeks. The 26 half-payments equal 13 monthly payments, so one extra payment per year goes toward paying down your principal. For example, on a $100,000, 30-year loan at 9 percent, with 27 years to go, that cuts about 6 1/2 years and $46,000 in interest off the mortgage. The savings are real." (Kiplinger's Personal Finance Magazine, September)

TAKE YOUR CHOICE: "Interest rates will rise soon and kill this bull. The excuse every investor seems to be using to justify buying stocks is low interest rates. Late-arriving investors will become panic-stricken when they discover what rising rates do to their stocks." (Baker Report) . . . "We believe very strongly that the market is about to break out of its trading range. When it does so it should run very, very fast. Obviously, we feel the breakout will be on the upside." (Dean's List) . . ." Every important stock market peak has been preceded by tops in the Dow Utility Index and in brokerage stocks. Both sectors registered new highs last week. Winners of the 1980s will be the 'dogs' of the 1990s." (Institutional View) . . . "The market is poised to make new highs!" (Market Action) . . . "Sort of like a workhorse pulling a plow, the market is slowly but steadily making upside progress. All trends are pointing up. Remain patient and stay aggressively invested." (Sasi Market Timing) . . . "The U.S. stock market has now held up into the target month of August, and should peak in the 3,600s pursuant to a historic crash." (Robert Prechter's The Elliott Wave Theorist) . . . "There's a good chance that stocks of the big drug companies could drop another 20 to 30 percent in the next 12 months." (Christina Heuer, pharmaceutical analyst, Smith Barney) . . . "Although gold stocks have surged 15 percent since March, they are still attractive. I like Homestake Mining, Placer Dome, Pegasus Gold and Newmont Mining." (Michael Metz, Oppenheimer & Co.)

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