U.S. indexes tumble after falling Nikkei


January 25, 1994|By JULIUS WESTHEIMER

In the wake of a 5 percent plunge in Japan's Nikkei stock index -- equal to 195 points in the Dow Jones industrial average -- all popular U.S. indexes gave ground yesterday. After a roller-coaster ride -- up 20 points in the morning, down 13 after nTC lunch -- the Dow steadied and closed at 3,912.79, off 1.69 points for the busy session.

AND NOW WHERE? "The new love affair with stocks is strong, but it could end bitterly, as it did after the 1973-74 bear market." (Fortune, Jan.) . . . "We are impressed by the prospect of another year of economic growth, which has the potential to bring continued low inflation and a benign interest-rate trend. Our Dow Jones objective is 3,900-4,000." (Bob Brinker's Market Timer) . . . "Remember that this is one of the most overvalued stock markets in history based on dividends, earnings, cash flow and book value. I will be shocked if 1994 does not include at least a 10 percent correction." (Ned Davis Special Report) . . . "In 1994, speculation will build to the point of mania." (Rod Nilsson's Close Lines) . . . "The best trade in 1994 is to 'short' December corn at 272 or better." (The Oracle) . . . "Repeatedly in my stock market operations I have sold a stock while it was rising -- and that has been one reason why I have held on to my fortune." (Bernard Baruch)

TAX UPDATE: "Did you realize that the 1993 retroactive tax changes face a stiff test in the Supreme Court? The question is, does the government have the right to change tax laws retroactively? That's what a lot of people wanted to know after the 1993 tax law, passed last August, raised taxes on many upper-income taxpayers as of Jan. 1, 1993. . . . For decades the Supreme Court and federal appeals courts have said that the government has that right. Now this question has re-emerged in the case of U.S. vs. Carlton, to be argued Feb. 28." (Wall Street Journal.)

GET BUSY: Only six days remain to enter our 1994 Dow Jones forecasting contest, with dinner and lunch with Mr. and Mrs. Ticker as top prizes. The 10 runners-up will receive best-seller books about money, investing, etc. Send your prediction for the year-end Dow Jones average on a postcard (no letters accepted) to Julius Westheimer, Ticker Contest, Business News Department, 5th floor, The Baltimore Sun, 501 N. Calvert St., Baltimore 21278. Print your whole number prediction (no decimals), your name, address and home phone number. Give reasons if you wish, but they are not required. Only one prediction per person, and a coin flip unties ties. Your card must be postmarked by midnight Sunday, Jan. 30.

HOPEFULLY HELPFUL: "How To Survive A Scary Market" in Fortune, Dec., is worthwhile reading. Excerpts: "Rule 1: Take the number 100, subtract your age, and the remainder is the percentage you should keep in stocks. For example, if you're 25 years old, keep 75 percent in stocks. Rule 2: Tally what's coming up in the next five years -- college, orthodontia, a new car? Keep that money in a money fund. Rule 3: When buying or selling stocks, give yourself a floor and a ceiling. Rule 4: Consider dollar-cost averaging into a mutual fund. Rule 5: Know what your mutual fund is all about and be careful of friendly titles like 'opportunity' and 'frontier.' "

LOOKING FOR WORK? Randolph Bandel, account manager, Rollins Leasing Corp., Baltimore, writes: "There is a growing shortage of truck drivers of heavy trucks such as tractors and tractor-trailers. Recently the government (Department of Transportation) has required these drivers to pass written and driving tests. Some people who have driven in the past have been unable to qualify, causing a shortage of drivers. The future for heavy truck drivers looks very good, and their income will increase. Some community colleges offer training. Also, the Yellow Pages show private schools. We at Rollins lease trucks, and many of our customers have a hard time getting qualified drivers."

BALTIMORE & BEYOND: Crown Central Petroleum appears under "Marc Perkins's Picks" in Barron's Jan. 24 cover story titled "Stock Picking as the Dow Hits Record Highs: Raves and Pans from Four Top Money Managers." . . . The same Barron's runs a long article, "Beaten Down Badly, Westinghouse Appears to Be Getting Its Act Together." . . . In San Juan, Puerto Rico, the Sunday New York Times costs $7 . . . "The shortest recorded period of time lies between the minute you put some money away for a rainy day and the unexpected arrival of rain." (Jane Bryant Quinn) . . . Stocks with local connections reaching 12-month highs include Allied Irish, Bethlehem Steel, Cosmetic Center, Danaher, Integrated Health, Martek Biosciences, Manor Care and Procter & Gamble.

IT'S DIFFERENT: "Many taxpayers believe their accountant is there to protect them, the way a lawyer protects a citizen accused of breaking the law. They assume they are free to discuss strategies for avoiding taxes, even those of questionable legality, with an accountant, with the understanding that those talks are confidential. But they are wrong. Unlike doctors and lawyers, certified public accountants do not enjoy federally recognized privileged communications. When subpoenaed by the IRS, accountants are obligated to testify against their clients. What you say to your CPA could be held against you in a court of law." (Lear's, Feb.)

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