Falling bond prices pull Dow down 37

The Ticker

September 21, 1993|By Julius Westheimer

Continuing Friday's slide and following bond prices downhill, stocks tumbled sharply yesterday. The Dow Jones industrial average plunged 37.45 points and closed at 3,575.80, now off 57 points in the last three gloomy sessions.

MONEY TALKS: "One outstanding success can often cover a multitude of blunders." (Stock Trader's Almanac) . . . "A fool and his money are soon parted. What I want to know is how they got together in the first place." (Cyril Fletcher) . . . "The time to invest money is when you have it." (Charles Pinkerton, my former boss, in 1961.)

BITS & PIECES: The following issues are included under "Core Stocks For Long-Term Capital Appreciation" in S&P Outlook, Sept. 15: Abbott Labs, AT&T, Bristol-Myers Squibb, H&R Block, CSX Corp., General Electric, Merck, Procter & Gamble and Sara Lee . . . "It's a buyer's and a seller's market. Buyers will continue to benefit from low mortgage rates and sellers will need to make fewer concessions on price, improvements or closing costs." (Kiplinger's Personal Finance Magazine, October) . . . Fortune, Oct. 4, in a chart headed "What Things Cost in 1993 Dollars," lists these "real" (inflation-adjusted) 1973 prices, followed (in parentheses) by 1993 prices: Harvard tuition, room and board $14,900 ($25,000); gallon of gasoline $1.26 ($1.12); movie ticket $5.74 ($5.05); dozen eggs $2.54 (89 cents); 19-inch color TV set $1,466 ($220); hospital cost per day $332 ($752); postage stamp 26 cents (29 cents.)

HOPEFULLY HELPFUL: "Cut taxes on investments by keeping good records of the cost of specific shares you buy in different stocks and mutual funds. Reason? If you buy shares in a stock or fund at different times at different prices and then sell some of them, detailed price records will enable you to sell the particular shares that produce the optimal gain or loss. If you do not have price records, the IRS will treat the first shares bought as the first sold." (Tax Hotline, September) . . . "Say 'no' when your bank increases your credit limit. Even though you're flattered, a higher credit limit brings increased temptations. Also, many lenders add up your credit limits rather than actual debts, so your new borrowing power may cause you to be rejected for a future loan." (Bankcard Holders of America.)

BALTIMORE SCENE: PHH Corp. stock reached a new 12-month high in last week's generally "down" stock market . . . T. Rowe Price Growth & Income Fund is listed under "Best Buys in Value Funds" in Forbes, Sept. 27, with this comment, "Some years growth funds are hot. Some years value funds are hot. When in doubt, you should buy a value fund." . . . Last week, Mercantile Bankshares split its stock 3 for 2 and T. Rowe Price announced a 2-for-1 split . . . And, speaking of the local mutual-fund giant, T. Rowe Price's High Yield Fund appears under "Second Quarter Top 25 Bond Fund Winners" in Financial World, Sept. 1 . . . Highest insured 2 1/2 -year CD rates are now at Eastern Savings Bank, Chevy Chase Savings, Equitable Federal Savings (Wheaton), American Federal Savings (Rockville) and Loyola Federal. (Data from "100 Highest Yields.")

NOTES & QUOTES: "The old 'Rule of 72': To determine how many years it will take for an investment to double in value, divide the projected rate of return into 72. Example: A $25,000 annuity with a locked-in rate of 10 percent will take 7.2 years to grow to $50,000." ("All About Annuities" by Gordon Williamson) . . . "Perhaps high-tech will provide Americans plenty of jobs in the future, but these days the low-tech work of guarding malls, banks and armored cars offers more opportunity. The 475,000 workers in the security business outnumber those who work for computer makers by 115,000." (Moneypaper) . . . Today, the "Dow 5" stocks (the five highest-yielding, lowest-priced issues in the Dow industrials) are DuPont, Merck, Philip Morris, Union Carbide and Woolworth. In the 19 years through 1991 the "Dow 5" strategy -- holding them a year, then adjusting to a new "Dow 5" each year -- brought a total return of 3,300 percent!

LOOKING AHEAD: "I'm bullish now that interest rates have fallen again. Year to date, the 'total return' [gain plus income] for 30-year Treasury bonds is 22 percent, while the S&P 500-stock index is up only about 5 percent. So stocks still have some catching up to do." (Abby Joseph Cohen, co-chair, investment committee, Goldman Sachs, in Fortune, Oct. 4) . . . "Our studies suggest that in a few months there will be reduced demand for stocks and an increased supply of sellers. . . . Now is the time to sell anything you aren't content to hold for the next few years." (Kenneth Fisher, money manager)

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