Strong economic reports send bond yields up


January 04, 1994|By JULIUS WESTHEIMER

In the wake of strong economic reports, interest rates rose sharply yesterday and pushed the 30-year government bond yield to 6.41 percent, compared with its 5.78 percent return last October. The Dow Jones industrial average followed bond prices downhill most of the day but closed 2.51 points higher, at 3,756.60.

ENVELOPE, PLEASE: Speaking of the stock market, Mrs. Marie Scott of Baltimore won first prize in our 1993 Dow Jones forecasting contest with her prediction of 3,752, about two points below the 1993 closing figure of 3,754.09. Mrs. Scott and other contestants made their forecasts when the Dow stood around 3,350.

Reached at home over the weekend, Mrs. Scott, a retired Social Security employee, said, "I just picked that number out of thin air." My wife and I will take Mrs. Scott and her daughter to dinner at their favorite restaurant, Harrison's Pier 5.

CLOSE SECOND: Second prize goes to Milton Goldberg, also from Baltimore, with his forecast of Dow Jones 3,750. Asked how he selected his number, Mr. Goldberg, a retired educator, replied, "I follow the predictions of Elaine Garzarelli because she forecast the crash of 1987, and she came up with a 1993 prediction of a 16 percent-plus gain in 1993. So I was optimistic too and picked 3,750." Mr. Goldberg and guest will enjoy lunch with my wife and I at Tio Pepe's, his favorite eatery.

RUNNERS-UP: Next closest crystal ball gazers who will receive new hardback financial books, are, in order: Phyllis Zemlak 3,759; Martha Weisgerber 3,762; Adolph Paris, Jr. 3,764; Dr. Richard Lebow 3,742; Dennis Benson 3,770; Dr. Joel Brenner 3,773; Bob Lawrence 3,775; Beth Brenner 3,732; Ann Cramer 3,777; Dr. Ron Checkai 3,777.

EXPERTS? In our so-called "expert" category of 45 bankers, fTC brokers, investment counselors, media stars, etc., 44 people guessed too low, everybody except "Wall Street Week With Louis Rukeyser" producer Rich Dubroff who weighed in with a courageous, not-too-distant Dow Jones 4,016. The closest were Gail Dudack, technician, 3,740; Barry Salzman, Gruntal & Co's local manager, 3,730; Frank Cappiello, mutual fund executive, 3,700; Carter Randall, adviser, 3,680; and WBAL talk show host Allan Prell, 3,666.

AND NOW WHERE? (in proportion received): "Our top 10 long-term timers are bullish for the next six months. Several note that the stock market is beginning to decouple from the bond market and will probably be driven by corporate earnings. This change often produces an exciting rally. Of our top 10 long-term timers, eight are bullish, one neutral, one bearish." (Timer Digest) . . . "The Dow Jones industrial average will end 1994 at 2,000." (Joseph Granville) . . . "The Dow Jones average will end 1994 at 4,300." (Don Fisher's Financial Feedback) . . . "We continue to believe that the stock market remains the best area for maximizing your returns. Market psychology is loaded with pessimism, the market is virtually the only game in town and the technicals favor the bulls." (Jeff Helleberg, The Marketarian Letter.)

BALTIMORE BEAT: Baltimore Security Analysts Society holds its annual "Investment Outlook Panel" at noon Jan. 13 at Stouffer's Harborplace. Speakers will be William Miller, Legg Mason; Richard Fontaine, Richard Fontaine Assoc.; and Lois Burleigh, ASB Capital Manegement. Future programs: Jan. 18, Education Alternatives; Jan. 25, Host Marriott Corp. . . . If you want to know how hard your wallet will be hit this year by taxes (very hard), send for Wolpoff & Co.'s free "Hold On To Your Wallet: The Revenue Reconciliation Act of 1993" by phoning 837-3770.

1994 RESOLUTION: "To guard against insurance fraud, call your state insurance department before you buy any policy to verify that the insurer actually exists and the agent is authorized by that company -- and always make out the check to the company, not the agent." (James Hunt, National Insurance Consumer Organization.)

START YOUNG: "You're going to need at least $1 million to retire comfortably, but getting there isn't as tough as you think. Just save regularly and invest intelligently. To accumulate $1 million, you must save $600 a month for 30 years. That presumes you invest at 9 percent a year -- reasonable if you have mostly stocks and some bonds. Once you retire, your $1 million will generate an annual income of $50,000 and still give you enough growth to fend off inflation." (Jonathan Pond, pres., Financial Planning Information, Inc.)

JANUARY JOURNAL: For the record, the Dow Jones industrial average in 1993 was up 453 points, or 13.7 percent, the Dow utilities eked out a 3.7 percent gain and the Nasdaq composite index rose 14.7 percent. Most international mutual funds scored strong gains, with complete statistics on page 50 in Barron's, dated yesterday . . . Unhappily, locally-based Merry-Go-Round and locally-founded U.S. Surgical stocks are listed in the same Barron's under "NYSE Losers." The apparel chain issued down 79.2 percent, and the medical supply company, 67.3 percent for the year . . . "Did you realize that it took the average income fund only 56 days to get back to pre-1987 crash levels, the average balanced fund only 62 days and the aggressive growth funds -- the funds hurt most -- only 71 days to recover?" (Mutual Fundamentals.)

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