Stock market follows bond prices higher

The Ticker

September 28, 1993|By Julius Westheimer

As interest rates fell sharply yesterday in the wake of poor August home sales reports, the 30-year Treasury bond yield broke below 6 percent again. Stocks followed bond prices higher as the Dow Jones industrial average climbed 24.59 points to close at 3,567.70.

WALL STREET WISDOM: "There is scarcely an instance of a man who has made a fortune by speculation and kept it." (Andrew Carnegie, 1902) . . . "I never gamble." (J. Pierpont Morgan, 1909) . . . "I claim that America has been built on speculation, and further progress must be made in that line." (Richard Whitney, 1930)

MARYLAND MEMOS: PHH Corp. stock reached a new 12-month high late last week in a generally "down" market . . . Legg Mason's Gerald Scheinker will mail you "Telephone Update: Second Quarter 1993," if you phone 486-8010. Mr. Scheinker calls the piece "a good overview of AT&T, 'Baby Bells' and related companies since the 1984 divestiture, including performance figures." . . . For a copy of T. Rowe Price's "Risk-Adjusted Performance: A Better Way to Measure Investment Performance," call Steven Norwitz, 547-2242 or (800) 541-8335 . . . Chevy Chase Savings, MBNA America (Wilmington, Del.) and Equitable Federal Savings (Wheaton) are listed under "Top Savings Deposit Yields" in Barron's, Sept. 27, on newsstands this week . . . Baltimore's investment adviser Eddie Brown, quoted in Sunday's New York Times, is eyeing Home Depot stock, down substantially from its August level.

LOOKING BACK: Historically, October has been a slightly "up" Wall Street month, rising an average 0.4 percent in the last 41 years. But according to The 1993 Stock Trader's Almanac, "the memory of back-to-back October massacres in 1978 and 1979, the 508-point 'meltdown' in October 1987 and the Friday the Thirteenth plunge in 1989 may affect bullish feelings in forthcoming Octobers." Ticker Note: Referring to the Oct. 19, 1987, crash, today's Dow stands at more than double the closing level (1,738.22) of that dark day six years ago next month. Many who dumped good stocks that day and afterward may regret their hasty actions.

LOOKING AHEAD: "Don't buy stocks yet. With interest rates near their lows and the economy growing slowly, stocks have little reason to advance." (S&P Outlook, Sept. 22) . . . American Home Products, Coca-Cola, General Electric, Hershey Foods, May Department Stores, Merck and Wal-Mart are listed under "High-Quality Stocks for Above-Average Results For at Least 5 Years" in the same Outlook . . . "Stock prices are not overvalued, may be even less risky than bonds at this point." (Caldwell Trust Co.) . . . "The market keeps rising, but with very weak momentum. It is on the edge of a severe correction which will unfold in the next few months." (CS Technical Investor) . . . "Has the valuation rubber band been stretched too far? Perhaps, but it might not snap until short-term interest rates rise significantly." (The Zweig Forecast.)

HOPEFULLY HELPFUL: Did you realize that the total return (gain plus income) on the Lehman Bros. long-term government bond index this year to date is 19.5 percent, compared to 8 percent on the S&P 500-stock index and 12 percent on the Dow Jones industrials? . . . "Many IRS officers are unreasonably aggressive in their first encounter with a taxpayer who's far behind in his/her taxes. Strategy: Tell the officer that you are unable to pay and submit a compromise offer. Then your case goes to a specialist and the aggressive person is out of the picture." (Tax Hotline) . . . "Sell your stocks when the stock's rate of gain exceeds expectations, when you wouldn't buy the issue today, when the stock reaches your target price or when the industry gets widespread bullish coverage." ("It's Not What Stocks You Buy, It's When You Sell That Counts," by Donald Cassidy, $24.95.)

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