Profit-taking, rates drive Dow down

The Ticker

November 04, 1993|By Julius Westheimer

Pushed down by profit-taking, higher interest rates and computerized program selling, the Dow Jones industrial average fell 35.77 points yesterday and closed at 3,661.87. Utilities were also weak, down about 3 percent on average.

Regarding yesterday's sharp drop: "Don't fall in love with your stocks; they can break your heart." (Stock Trader's Almanac) . . . "Become more humble as the market goes your way." (Bernard Baruch, legendary Wall Street sage.)

NOVEMBER NUGGETS: November has historically been the year's second-best Wall Street month, rising an average 1.5 percent over the last 41 years, as measured by the S&P composite index. Only December has been stronger, advancing 1.6 percent . . . These stocks are recommended by seven newsletters followed by Hulbert Financial Digest: AT&T, General Electric, Intel and Motorola. Placer Dome is recommended by eight newsletters followed by Hulbert and nine by American Barrick . . . Updated figures: Since 1973, investors following the "Dow 5" strategy -- the annual buying of the five lowest-priced of the 10 highest-yielding Dow stocks if any changed during the year -- have seen their investment grow by a rate of 20.6 percent per year. Starting 20 years ago, a $1,000 investment ballooned to $56,858! Over this past year the "Dow 5" shot up 38 percent. Today, the "Dow 5" are Du Pont, Merck, Philip Morris, Union Carbide and Woolworth.

NOT WORTH TRYING: If you are trying to "time" your stock purchases, read this warning: "If you had invested $5,000 a year for 20 years in the AIM Weingarten mutual stock fund at the best possible time each year -- the market's exact low -- your cumulative $105,000 would have grown to $1,066,060. If you had done the same at each year's exact high -- the worst time to invest -- your $105,000 would have still expanded to $836,450. But, had you placed $5,000 a year on Dec. 31 of each year in an 8 percent fixed-rate fund, your money would have edged up to only $228,000. Moral: It's not when you invest -- it's that you do invest." (AIM Weingarten promotional material.)

MARYLAND MEMOS: These local firms, with their ranking (in parentheses) of "250 Companies on the Move," are listed in Business Week magazine's "Special 1993 Bonus Is sue" ($3.95), just out: Alex. Brown (91), Legg Mason (249), Merry-Go-Round Enterprises (41) and Mid-Atlantic Medical Services (19). The 282-page issue describes how rankings were awarded . . . T. Rowe Price International Stock Fund is included among funds recommended by eight newsletters followed by Hulbert Financial Digest . . . CSX Corp. and Mid-Atlantic Medical stocks reached 12-month highs in trading earlier this week . . . The U.S. savings bond "variable rate" as of Nov. 1 is 4.25 percent, according to the Baltimore Federal Reserve Branch. The bonds have a guaranteed 4 percent rate if you hold them at least five years.

BITS & PIECES: Want to check on your broker's background? A toll-free hot line -- (800) 289-9999 -- will advise about criminal indictments, civil judgments, pending disciplinary proceedings and securities-dispute arbitration. The sponsor is the National Association of Securities Dealers, and the line is open Monday through Friday, 9 a.m. to 5 p.m.. No charge for individuals . . . "It takes about one week of job searching for each $2,000 of income being sought. For example, with a goal of $30,000, the search will take about 15 weeks." ("How to Locate Jobs and Land Interviews," by Albert L. French, $19.95.)

HOPEFULLY HELPFUL: "Be careful about investing in mutual funds in November and December. If you buy at year-end you may have some taxable gains from the fund even though you've been in it for only a few weeks. That's because funds distribute gains for the entire year to all their shareholders, usually at year-end. So you might have some share of the resulting tax liability even though you haven't benefited from any of the gain. Check with the fund first to see how much it is likely to distribute in gains for 1993." (Christopher Saunders in "Louis Rukeyser's Wall Street.") . . . "Stocks have returned 10.3 percent a year since 1925 vs. 5.2 percent a year for intermediate government bonds and an inflation rate of 3.1 percent annually over the same period." (Ibbotson Associates.)

STOCK WATCH: "We are again approaching the top end of the bullish trading range. It is quite possible the top of the range will be extended as we still see a very large short interest, which could run for cover at any time and give the market a sharp upward spike." (Ripples in the Wave Advisory) . . . "The U.S. stock market still offers plenty of opportunity. The combination of low, stable inflation and low interest rates has historically [and currently] been extremely positive for the valuation of financial assets." (Prudential Securities Portfolio Comments) . . . "When everybody starts looking really smart, and not realizing that a lot of it is luck, I get scared." (Raphael Yavneh, Forbes)

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