Worried when the Federal Reserve raised short-term interest rates for the third time this year, and also concerned that undisclosed "derivatives" could damage their mutual funds (see the Sunday Sun Business Section, April 17, and yesterday's Wall Street Journal), investors unloaded stocks heavily yesterday. The Dow Jones industrial average fell 41.05 points and closed at 3,620.42, now off 358 points, or 9 percent, from its all-time high.
STARTING OUT: Are you new in Wall Street? Money magazine, May, has a worthwhile story on that topic. Excerpts: "Buoyed by first-timers, last year saw a record $136 billion go into stock mutual funds, up from a previous high of $82 billion in 1992 . . . Some advice: Learn the ABCs of investing. A $49 membership in the American Association of Individual Investors (312-280-0170) gets you its monthly journal containing advice for novices and access to 50 chapters around the country that sponsor seminars for beginners . . . Some good books for starters are "The Mutual Fund Buyer's Guide" by Norman Fosback, "The Intelligent Investor" by Benjamin Graham and "One Up on Wall Street" by Peter Lynch.
MORE FOR BEGINNERS: The article continues, "Push to invest as much as you can as early as you can. Historically, stocks have returned an average of 10 percent a year. If you're 24, now earn $25,000 a year and start squirreling 10 percent of your gross income in the market, you could easily have $1.8 million by age 65 . . . Go for growth; let your earnings provide income . . . Invest regularly . . . If you get a large hunk of your company's stock, dump most of it . . . Pick your advisers carefully . . . If you hire a financial planner, ask to see copies of plans he or she wrote for other clients."
MARYLAND MEMOS: Baltimore ranks No. 7 in "How 24 U.S. Cities Ranked in First-Quarter Stock Performance," compiled by Money-Nordby Cities Index. Our loss was 0.3 percent from Jan. 1 through March 31. Los Angeles, up 7.3 percent, ranked first, New York last, minus 12.9 percent . . . These local stocks reached 12-month highs in recent trading: Signet Bank, Provident Bank, Mid-Atlantic Medical, Loyola Capital, Hechinger and Sylvan Learning. Westinghouse slipped to a yearly low . . . Charles Allmon, publisher of the Growth Stock Outlook in Chevy Chase, says, "This is no time to reach for the brass ring; this market remains as overvalued as any market in this century."
BALTIMORE BEAT: Legg Mason will mail its 34-page, jampacked Mid-Atlantic Bank & Thrift Quarterly if you call or write. ("Bank stocks have been flat over the past year, which, when coupled with overall growth in earnings and book value, results in improved valuations." . . . "Bethlehem Steel spent $1 billion on its Sparrows Point plant in Baltimore to make it more productive. The cost of making a ton of steel there fell from $500 per ton in 1990 to $435." (Kiplinger's Personal Finance Magazine, May) . . . Speaking of Bethlehem Steel, the stock is rated a "buy" in a recent issue of Moneypaper . . . Howard "Pete" Colhoun, local adviser, says, "I'm worried about bonds. Interest rates will continue to climb this year. But the stock decline is two-thirds over."
WORKPLACE WISDOM: Men's Health, May, has a few valuable career tips: "Be on time. In a work situation, being late sends out a lot of negative subliminal messages. If you have to walk to be somewhere at a specific time, leave 15 minutes earlier than you normally would. When driving more than a few miles, leave 30 minutes earlier than you had planned just in case you hit traffic or get lost . . . You'll accomplish more of your work on time if you don't interrupt your work flow by returning phone calls. Schedule your call-backs for a typically unproductive time, like just before lunch or late in the afternoon . . . Save more money. Most people think savings is what's left after they pay bills. With so much discretion, you'll never accumulate anything. Instead, sign up for a mutual fund that assumes you'll contribute a certain amount per month. You'll get a deposit ticket in the mail, which you can write a check for, just like your other bills."
Speaking of being late, industrialist Henry Ford once said, "There's a big difference between being late and too late."