The 1993 midsummer bull market rolled on yesterday as interest rates continued to decline. With the Treasury's new 2-year note priced to yield 4.87 percent -- its yield stood at 5.69 percent one year ago today -- the Dow Jones industrial average added 13.13 points to close at a record 3,652.09 in heavy trading.
FROM THE TOP: "Become more humble as the market goes your way." (Bernard Baruch) . . . "Don't confuse wisdom with a bull market." (Frank Cappiello) . . . "Your emotions are often a reverse indicator of what you should be doing." (1993 Stock Trader's Almanac.)
BALTIMORE BEAT: Legg Mason's William Miller will be the guest on "Wall Street Week With Louis Rukeyser" tomorrow night, with panelists Michael Holland, Bernadette Murphy and Robert Stovall. Mary Farrell will be the guest host . . . The T. Rowe Price Blue Chip Growth Fund appears under "New Choices from Blue Chips to Small Caps" in a recent New York Times listing . . . Ferris, Baker Watts' Morry Zolet sends along the new "Dow 5" list, consisting of Du Pont, Merck, Philip Morris, Union Carbide and Woolworth. Phone him at 659-4601 for details. As of today, those five issues represent the highest-yielding, lowest-priced stocks in the Dow Jones 30 industrials list. Had you invested $1,000 in the "Dow 5" 19 years ago, and rearranged the list to a new "Dow 5" every year, your $1,000 grew to $33,000! Reason? You bought high-quality, temporarily out-of-favor stocks on a disciplined annual schedule.
MORE ON BALTIMORE: A. G. Edwards' Patrick Larkin (547-1131) will mail a colorful, informative brochure, "Tax-Saver: Special Report, Tax Reform 1993," with specific suggestions, charts, graphs, etc. . . . Legg Mason's "Income Buy List," which the firm's Gerald Scheinker says has just been expanded, includes these stocks with dividend percentages in parentheses: Nevada Power (6.3), United Illuminating (6.1), Boston Edison (5.5), General Public Utilities (5.2), Southern Company (5.4) and Wisconsin Energy (4.9). Mr. Scheinker (486-8010) will mail the 12-page brochure . . . Potomac Electric Power, widely held in this area, reached a 12-month high early this week. The stock now yields 5.7 percent . . . Washington Gas Light, our neighbor to the south, is listed under "Dividends Paid for 50 Years or More" in S&P Outlook, Aug. 25.
MIDSUMMER MEMOS: "Buying undervalued stocks is still a more profitable strategy than buying those that analysts predict will have strong earnings growth. Seek stocks with P/Es below 16, and above-average yields, earnings and dividend growth rates." (David Dreman) . . . Barron's, on newsstands this week, reports that the S&P 500-stock P/E ratio now stands at 22.5 times earnings vs. 24.3 times last year. The "normal" P/E ratio generally hovers around 16 times . . . The same table shows the S&P dividend yield now down to 2.75 percent, vs. 2.99 last year, now nearing a historic bear market signal . . . The latest LaLoggia's Special Situation Report, Aug. 20, runs a bold headline, "New Drop in Business Loans Suggests Economy Will Weaken Once Again" . . . The new Kiplinger Washington Letter warns that a sweeping civil service overhaul, including more power for managers to hire and fire, could drop government employment 200,000 to 250,000 by the end of this decade . . . Mutual Fund Letter editor Gerald Perritt says that the worst mistakes mutual fund investors make include market "timing," trading sector funds, not being aggressive enough, setting your expectations too high, selling during a market decline, investing blindly in "hyped" funds, and chasing yield.
TAKE YOUR CHOICE: Of the many newsletters we've read recently, opinion is about 70 percent gloomy.