Dow Jones vaults 10 points to reach 3,583, another high

The Ticker

August 12, 1993|By Julius Westheimer

In the wake of still lower interest rates -- 30-year government bond rates sank yesterday to a 16-year low of 6.4 percent -- the Dow Jones industrial average burst through to another all-time high. The Dow indicator shot up 10.62 points to close at a record 3,583.35, now ahead 282 points, or 8.5 percent, for the year to date.

WALL STREET WISDOM: "Past experience suggests that "theme investing" -- tobaccos, brokerage firms, specialty retailers -- has all the temporary dazzle of a fast sprinter. We've always considered ourselves a marathon runner, with much more staying power. A cornerstone of our investment philosophy has been to invest in companies that can produce a consistent stream of earnings on a fairly predictable basis." (The Patient Investor.)

BALTIMORE BEAT: Legg Mason (539-3400) will mail its latest 28-page "Research Weekly," including advice on Chesapeake Corp. ("second quarter above expected results"); Cosmetic Center ("third quarter on target, Buy-1 Rating reiterated"); Danaher Corp. ("second quarter above projection"); Oakwood Homes ("third quarter in line with projections"), etc. . . . T. Rowe Price Science & Technology Fund is listed under "Winners" in Kiplinger's Personal Finance Magazine's September cover story, "Mutual Funds: Best of the Best." . . . Harry B. Gorfine & Co. (539-5474) will mail "Alternative Strategies for Financing College Expenses" ("A few ideas include selling your assets, home equity loans, your 401(k) plan and real estate.")

MARYLAND MEMOS: Local stocks reaching new 12-month highs early this week were Alex Brown, Allied Irish and Danaher . . .

Investment Counselors of Maryland, August letter, says, "As value-oriented investment managers it's tempting to see consumer product and health-care 'growth' company stocks at below-market P/E ratios. At a point, relative valuations will draw us to these issues but the time has not yet come." Phone 539-3838 for the full letter . . . McCormick & Co. stock is written up favorably in Dick Davis Digest, Aug. 9: ("The P/E multiple is 17, a 24 percent discount to the S&P 500 index. We're also attracted to McCormick's high insider ownership. Accumulate this 'flavorful' spice stock up to $24 a share for long-term investors.")

AUGUST ITEMS: In response to many requests, here is the "Dow 5" strategy once again: Buy the five highest-yielding, lowest-priced Dow Jones stocks, hold them for one year, then rework your list with the latest Dow 5. Beginning 19 years ago, $10,000 invested in this strategy returned $330,000, 3,300 percent gain. (No misprint.) In effect you are buying top-quality, temporarily out-of-favor stocks. . . . If the new tax bill places you in the 39.6 percent tax bracket, a 5.5 percent tax-free yield -- about the current rate for long-term tax-frees -- is the equivalent of 9.10 percent taxable equivalent. Dean Witter's Rick Faby (547-7000) will mail you a complete chart.

BE CAREFUL: "We caution investors seeking higher income than that offered by money funds to go slowly at first and be fully aware of the risks involved. Even a stretch for marginally higher yields, such as with short or intermediate bond funds, entails more risk than money funds or CDs. Keep in mind that cash, while paying only 2 or 3 percent, is much better than losing your capital." (Moneypaper.) . . . "The clock continues to tick on the bull market as the Dow nudges into new high territory. Lulled into a false sense of security, investors are willing to overlook the fact that the stock market is fundamentally overvalued, perched at levels from which bear markets always begin. Buyer beware." (Geraldine Weiss, Investment Quality Trends.)

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