Dow off 6 as Tokyo worries Wall Street

The Ticker

November 30, 1993|By Julius Westheimer

The Dow Jones industrial average faded in late trading yesterday and slipped 6.15 points to close at 3,677.80. Toward the final bell investors appeared worried about the 6 percent plunge in the Japanese stock market -- equal to 220 points on the Dow Jones industrials -- in its two most recent sessions.

WALL STREET WISDOM: "I have always believed that investors should ignore the ups and downs of the market." (Peter Lynch, highly successful ex-manager of Fidelity Magellan Fund, in "One Up On Wall Street.") . . . "Don't try to buy at the bottom and sell at the top. This cannot be done -- except by liars." (Bernard Baruch, another successful investor) . . . "Money is a terrible master, but an excellent servant." (P. T. Barnum, 1810-1891.)

TURKEY HASH: Did you know that December is historically Wall Street's best month, with the S&P composite index rising an average of 1.8 percent over the past 43 years? . . . Were you aware that Coca-Cola derives about 80 percent of its profits from overseas? . . . Did you realize that, even at a gentle 3 percent a year, inflation will cut the value of a traditional pension in half in 23 years? . . . Did you know that "The Internal Revenue Manual," the IRS' employees' bible, says that the IRS will tolerate such legitimate excuses (if you can prove them) as "It was the mailroom's fault," "I sent it to the wrong place," "I didn't know how much I owed," etc.?

HOPEFULLY HELPFUL: "If your 1993 losses are $3,000 or less, you might as well take them now. At that level, the tax benefit is easy to figure: You can deduct a loss of $3,000 or less from ordinary income on your tax return." (Smart Money, December) Regarding the above, a Ticker warning: Never let tax considerations completely dictate investment judgment . . . Business Week, Dec. 6 issue, on newsstands this week, runs an excellent cover story, "The Yield Game: How to Beat Low Interest Rates -- And Avoid the Traps." Excerpts coming Thursday, along with an updated "Dow 5" . . . Two good new books for holiday giving are "Emerging Stock Markets" by Margaret Price ($39.95), a 403-page discussion of markets in China, Chile, India, etc. and "Economics Explained: Everything You Need to Know About How the Economy Works and Where It Is Going" by Lester Thurow and Robert Heilbroner, 256 pages ($12.)

BALTIMORE BEAT: T. Rowe Price U.S. Treasury Long-Term Bond Fund is listed under "Top 10 Treasury Bond Funds, Based on 3-Year Performance" in The New York Times, data supplied by the Morningstar rating service . . . And Price's New Asia Fund appears under "The Seven Wonders of The World" in Money, December . . . Of the three companies offering credit insurance "that market their coverage of domestic and foreign receivables to small and mid-size companies," ("How to Impress a Banker," Inc. magazine, November), two firms have local connections. To quote from the article, "American Credit Indemnity, owned by Dun & Bradstreet and based in Baltimore, is the biggest carrier, targeting companies with revenues from $5 million to $150 million (and) Fidelity & Deposit, in Baltimore, says it will consider coverage for manufacturers, wholesalers and distributors with revenues of at least $1 million."

MARYLAND MEMOS: Baltimore Security Analysts meet on Thursday, Dec. 2, at the Sheraton Inner Harbor, at noon, with H. William Brown, chief financial officer of Conrail, as guest speaker . . . PaineWebber's Marvin Fribush will send you his firm's eight-page "Tax-Advantaged Investment Report: The New Tax Law and How It Will Affect You and What You Can Do About It" if you phone him at 576-3220 . . . Harry B. Gorfine & Co. will mail you "Tax Report: Individual Estimated Tax Rules Simplified" if you phone 539-5474 . . . Among local stocks, Baltimore Bancorp and Danaher Corp. reached 12-month highs in recent trading; Adams Express, Alexander & Alexander and Marriott International slipped to yearly lows.

LATER YEARS: "Beat The Five Threats To Your Retirement" in Money, November, is worth reading. Excerpts: "(1) You will not receive an old-fashioned pension. If current trends continue, the heyday of the traditional pension is past. (2) Your retiree medical benefits will be trimmed or canceled altogether. (3) Your Social Security benefits will shrink. The new tax law already increases the portion of your Social Security subject to federal income tax from 50 to 85 percent if your total income exceeds $44,000 for married couples and $34,000 for singles. (4) Inflation will eat your savings and (5) You will sabotage yourself by not putting away enough money."

TURKEY SOUP: "The Cabot Power Index has just flashed a sell signal! This indicator has helped keep us virtually fully invested for almost three years. But now that we have a sell signal, we could not ignore it." (Cabot Market Letter) . . . "Lots of action in the market over the past couple of weeks with the Dow Jones industrials and Transports moving to new highs. We also saw the second lowest reading of 'bulls' this year, a 12-month low in the Bullish Sentiment for bonds. We read all of this as bullish for stocks." (Investors Intelligence) . . . "I believe that some day China will experience the mother of all bull markets." (Barton Biggs, Morgan Stanley's Investment Perspectives) . . . "The interest rate backup is not yet over and therefore some further problems for stocks exist over the short term." (Donaldson, Lufkin and Jenrette.)

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