Economists call inflation 'no problem'

The Ticker

April 12, 1994|By Julius Westheimer

Adding to last week's 38-point advance, the Dow Jones industrial average scored a solid 14.57-point gain yesterday, closing at 3,688.83. Although investors appear cautious as they await this week's producer and consumer price reports, Wall Streeters were cheered by a USA Today poll which concluded that 84 percent of economists surveyed thought inflation would be no problem this year.

FROM THE TOP: John Templeton and Peter Lynch, "two of the greatest mutual fund managers of this century," to quote host Louis Rukeyser, visited "Wall $treet Week" last Friday. Here are brief quotations:

Templeton: "We get market dips of 10 percent like this one every three or four years. . . . Stocks are not cheap yet, but I like the banks because of possible takeovers, also depressed drug stocks like Johnson & Johnson, Merck and Bristol-Myers. . . . My favorite countries to invest in now are Indonesia, Thailand, Korea and Turkey, but do it through global mutual funds . . . I'm concerned that inflation will return. . . . The market will rebound. By the year 2000, the Dow average will hit 6,000."

Lynch: "I like the auto stocks now, also Warner Lambert, Johnson & Johnson and Travelers. . . . Bank stocks are attractive, especially Shawmut and Bank of Boston . . . I would avoid electric utility stocks here; too much competition is setting in. I like telephone utilities better, like Nynex and Southwestern Bell. . . . Don't worry about extraneous things like gross domestic product, Federal Reserve Board index or other reports like that; just consistently buy stocks of companies with strong earnings and good growth potential."

HOPEFULLY HELPFUL: "If your tax bill for 1993 was increased retroactively, due to the impact of the new 36 and 39.6 percent tax rates, you do not have to pay the whole tax increase this April 15. You can pay in three equal installments; file IRS Form 8841 with your return." (Thomas Ross, partner, Coopers & Lybrand) . . . Speaking of taxes, 10 percent of returns are received annually with superficial mistakes: mathematical errors, wrong line entry and use of wrong tables . . . Have you balanced your investment portfolio recently? With the market down sharply, and your stocks' percent to total now lower than you had originally planned, consider adding to positions at what appear to be bargain prices . . . "Beware of foreign bonds. Yields on bonds issued abroad look attractive but they are subject to extra risk. In addition to interest rate risks and the issuer's credit standing, they are subject to exchange rate risk. Even if bonds go up in value in foreign currency, they may drop in dollar terms." ("The Guide to Investing in Bonds" by David I. Scott.)

MONEY SAVER: "Near-identical auto insurance coverage can vary by 50 percent or more depending on the company. It's possible to cut an insurance bill in half simply by comparison shopping. For example, we asked the rating service Express Quote for rates to insure a Tampa, Fla., married couple with a 16-year-old son. Six-month premiums ranged from $753 all the way up to $2,571. In Sacramento, Calif., a similar search turned up rates ranging from $1,198 to $1,839." (Kiplinger's Personal Finance magazine, May.)

LOOKING AHEAD: "If the Federal Reserve doesn't tighten credit again, we could go to Dow Jones 4,500 or 4,600. If the Fed does tighten another two or three times, we will have our 10 to 15 percent correction -- and then we'll make 4,600 after the correction, not before." (Elaine Garzarelli, chief strategist, Lehman Bros., in a February interview in "Louis Rukeyser's Wall Street") . . . "The worst is over. We'll see Dow 4,000 this year." (Gail Dudack) . . . "We are approaching a time when major cyclical lows should form, giving us a major buying opportunity." (Professional Timing Service.)

LOCAL LINE: Baltimore is listed No. 58 from the top in "The Top 100 Markets: A Guide to Markets Where Homeowners Will Fare Best" in U.S. News & World Report's cover story April 11. Baltimore's "average annual home price growth" is 2.8 percent, and the existing 1994 price listed as $138,595, up 2.6 percent from last year. The top market is San Antonio, followed by Albuquerque, N.M., and Portland, Ore. Worst are Los Angeles, Hartford, Conn. and Anaheim, Calif. The average annual home price growth (1991-1994) is listed at 9.1 percent, Los Angeles minus 4 percent. Washington, D.C. is listed No. 74, Philadelphia No. 77.

APRIL SHOWERS: Saturday, I will resume answering questions on WBAL-TV (Channel 11), Saturdays at 8:15 a.m. and weekdays at 5:45 and 6:45 a.m . . . These local stocks hit 12-month highs last week: Crown Central, Home Federal, Loyola Capital, Mid-Atlantic Medical and Signet Banking. Sinking to yearly lows were Alexander & Alexander, Chesapeake Utilities and PHH Corp.

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