Wall Street stumbles after starting off fast

The Ticker

April 28, 1994|By Julius Westheimer

Stocks failed on Tuesday to carry through after Monday's 57-point rally as the Dow Jones industrial average slipped 6.24 points to close at 3,699.54. At this point, the Dow stands 279 points below its all-time high (3,978.36) and 286 points above its 12-month low (3,413.50). Exchanges were closed yesterday to observe the national day of mourning for former President Richard M. Nixon.

WALL ST. WISDOM: "I have a rigorous 'sell' discipline that I developed after the 1973-74 bear market. I try very hard not to take any big losses in the AIM Charter Fund which I manage. My secret: If I cannot find a compelling reason to own a stock, everything else being equal, I sell." (Julian Lerner, whose low-risk fund beat the S&P 500-stock index by 7.3 percentage points in 1991 and was up 8.2 percent in 1990, the last year the S&P was down.)

MARYLAND HONORS: Kavelle Bajaj, president and CEO of I-Net in Bethesda, is included among "The Top 50 Women Business Owners" in the cover story of Working Woman magazine's May edition. The story says, "This Indian immigrant is the American Dream personified. Only nine years after starting a computer services company with just $5,000, she is expecting nearly $200 million in sales in 1994. In 1988, Bajaj recruited her husband from competitor EDS and made him executive vice president. 'We divide responsibilities,' she explained, adding, 'You don't hire a spouse to give him or her work; you hire the best candidate for the job.' She adds, 'When we hit the first $100 million, it was exciting, but other high points will come when we do an IPO [initial public offering], when we hit our first half-billion in revenues and when we become a billion-dollar company. They are all achievable goals.' "

BITING THE BEAR: "Big market drops, like the ones seen recently, can cause panic. It takes an iron stomach to stick with an investment program as the stock market tumbles. But get this: The 1973-74 bear market, when the S&P 500-stock index tumbled 43 percent, was the worst since the Depression. But assume someone started a systematic investment plan of $100 a month into a stock mutual fund (represented by the S&P 500), in January 1973. By September 1974, he/she would have invested a total of $2,100, but the investment had shrunk to $1,500. By the end of 1976, however, stocks had returned to previous highs and his/her investment had appreciated more than 25 percent from the original outlay." (Brokerage house report)

THE RIGHT STUFF: Here are more figures, compiled by Ibbotson Associates, Chicago, supporting long-term stock investing. Average annual returns from Dec. 31, 1925, through Dec. 31, 1993, show the Consumer Price Index rose at a 3.13 percent rate, 30-day Treasury bills up 3.69 percent, 20-year Treasury bonds advanced 5.02 percent but -- the unmanaged S&P 500-stock index shot up 10.33 percent annually. Looked at another way, $100 invested on Dec. 31, 1925, grew to $1,200 in T-bills, $2,800 in long government bonds and $80,000 (no misprint) in the S&P index. And, assuming stocks were held for 15 years, the returns have been positive (up) in all 54 of those 15-year periods dating back to 1926.

BALTIMORE BEAT: On Tuesday, May 3, Baltimore Security Analysts host James A. Henderson, president and chief operating officer of Cummins Engine, at noon at the Sheraton Inner Harbor . . . T. Rowe Price Mid-Cap Growth Fund is listed under "Midcap Stocks: Fund Picks," in Smart Money, May . . . Tomorrow night, the title of Owings Mills-based "Wall Street Week With Louis Rukeyser" is "The Nation's Biggest Money Manager" with guest Fred Grauer, chairman, Wells Fargo Nikko Investment Advisors, and panelists Alan Bond, John Dessauer and Baltimore mutual fund executive Frank Cappiello . . . BGE is listed under "One Dozen Utilities to Watch," subtitled "These companies will enjoy an earnings boost from this winter's cold weather." (Smart Money, May).

WORKPLACE WISDOM: Should you move? "Years ago, executives seldom thought twice about moving for their employers," says National Business Employment Weekly, April 24-30 issue, on newsstands this week.

The article adds, "However, dual-income couples, widespread company downsizings and a changing workplace have made the relocation issue more complex. Here are questions to ask yourself and others: Are you at a point in your life where you can make a move? Would you take the same job with another company? (If the answer is 'no,' a move would probably be a mistake.) What's the new boss' reputation? Will the company give your spouse/partner job-hunting assistance? How long will you be in your new position? (Think twice if the company hasn't established clear performance goals and a time-frame.")

MONTH ENDERS: Excerpts from "Many Ways to Cut Your Insurance Bill" in Smart Money, May: Park in a garage; stop smoking; spread your risk between two cars; buy a conservative car, load it up with air bags, automatic seat belts and anti-lock brakes; raise your deductible; take a defensive driving course and retire early." . . . "Don't be a softy if you lend money to family or friends. Be sure you document the details, including a repayment schedule." (Kiplinger's Personal Finance Magazine) . . . "Seek long-term capital gains. These are subject to a 28 percent top tax rate, compared to rates as high as 39.6 percent under normal rules." (Ernst & Young)

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