Dow vaults 17.88 to close above 3,600

The Ticker

August 19, 1993|By Julius Westheimer

Closing above 3,600 for the first time as it surged to a record high in the wake of still lower interest rates, the Dow Jones industrial average vaulted 17.88 points yesterday and finished at 3,604.86. Drug stocks rebounded on reports that proposed health-care controls would be "phased in" over a period of years. As my father used to say, "Son, always remember that the soup never reaches the table quite as hot as it leaves the kitchen."

MONEY TALKS: "It is not the employer who pays wages -- he only handles the money. It is the product that pays wages." (Henry Ford) . . . "What do you think of those fellows on Wall Street who are gambling on gold at a time like this? For my part, I wish every one of them had his devilish head shot off." (Abraham Lincoln, 1862) . . . "Few of us can stand prosperity. Another man's, I mean." (Mark Twain, 1897.)

BOTTOM-FISHING? Although many people think they can accurately "time" their stock purchases, evidence shows that most people cannot consistently pick market bottoms, and that making regular purchases is a better strategy. If, for example, you had placed $5,000 annually in, say, the AIM Weingarten Fund during each of the 20 years ended Dec. 31, 1989, at the best possible time each year -- at precise market lows -- your cumulative $105,000 investment would have grown to $1,066,000. If you had done the same at the worst possible time each year -- at exact market highs -- your $105,000 would still have shot up to $836,000 (no misprint.) But eliminating guesswork, if you had invested the same amount of dollars consistently on the same date annually, Dec. 31, your assets would have grown from $105,000 to $890.000 -- a huge gain! Moral? It's not when you invest that matters -- it's that you do invest regularly for the long pull. (Above statistics drawn from promotional material, AIM Weingarten Fund.)

WORKPLACE WISDOM: National Business Employment Weekly, Aug. 13, on newsstands this week, runs a worthwhile story, "Hit The Books Before You Start Pounding the Pavement: Take Advantage of Your Local Library." Excerpts: "The accountant was well qualified, but nothing in his resume stood out from other finalists. During the interview, though, he set himself apart by revealing his extensive understanding of the company. Where did he gain his knowledge? At a public library, where a wealth of job-hunting information awaits those who know how to find it . . . Researching companies can help you locate names of executives to write to during your search and learn important facts to mention during interviews . . . Public libraries are surprisingly friendly." Ticker Comment: The Enoch Pratt Free Library and its branches have a wealth of job-hunting material and friendly people to help you find and use it.

MID-MONTH MEMOS: Local stocks reaching 12-month highs early this week include Alex. Brown, BG&E, Chesapeake Utilities, Citizens Bancorp, Potomac Electric Power and T. Rowe Price . . . Top insured 2 1/2 -year CD rates locally are now offered by Eastern Savings Bank, MBNA America (Wilmington, Del.), Chevy Chase Savings, Loyola Federal and Equitable Federal Savings (Wheaton.) Data from "100 Highest Yields," Aug. 9 . . . Over the last 20 years, here is how various investments performed, according to a Forbes magazine study: In order from the top: stocks, bonds, stamps, 3-month Treasury bills, diamonds, oil, gold, housing, Chinese ceramics and farmland. Over 10 years, in order: stocks, bonds, Chinese ceramics, 3-month T-bills, diamonds, housing, gold, stamps, farmland and oil . . . Legg Mason rates Black & Decker stock a "buy," commenting, "Increased estimates reflect lower tax rates." . . . Dean Witter's Jack Rosenbloom (547-7027) will mail "Long-Time Dividend Payers" and a "Pre-Retirement Income Management Evaluator." . . . "52 percent of companies require their employees to fly coach on business trips." (American Express survey.)

ENDPAPERS: The latest Kiplinger Washington letter feels that the stock market rally will continue, largely because of low interest rates, mild inflation and a growing economy. The letter also suggests that now, with tax rates rising, high-income investors should look more seriously than ever at tax-free municipal bonds . . . "Health-care stocks look attractive here, but drugs, including Merck, have further room to fall." (Frank Cappiello) . . . "The key here is earnings, because in general we're having a slow recovery. I like Imperial Chemical, Ford, General Electric and Honeywell." (Mary Farrell). . . "Now is the time to buy Disney; it's my number one pick of all stocks. Euro Disney will recover." (Jeffrey Miller, managing director, Provident Investment Counsel, guest on "Wall Street Week With Louis Rukeyser.")

In a recent Wall Street Journal stock-picking contest, investment professionals scored their biggest victory in history over individuals throwing darts at the stock pages. The experts as a group scored a 29 percent gain vs. the Dartboard Portfolio's loss of 43 percent. Biggest winners were Homestake Mining, picked by Oppenheimer & Co.'s Michael Metz, and Pioneer Electric, selected by Bank of Boston's Ned Riley . . . Ticker Warning: Although investment genius Warren Buffet is accumulating more shares of Salomon Inc. stock, I warn people about rushing out and buying Salomon shares. Reason? You will probably never know when he is going to sell.

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