Many stay on sidelines as Dow gains 11 points

The Ticker

May 17, 1994|By Julius Westheimer

Following bond prices higher, the Dow Jones industrial average climbed 11.82 points yesterday to close at 3,671.50. The Dow utility average slipped a trifle to a six-year low. Many investors remained on the sidelines, fearing that the Federal Reserve might raise interest rates when its policy-setting Open Market Committee meets today.

HOT OFF PRESS: Which mutual funds should you buy? Here, from the May 1994 S&P "Mutual Fund Profiles" volume, just received, are the "Top Performing Funds," in order, for the last five years through March 31, with percentage gains in parentheses: CGM Capital Development (244); Oppenheimer Main Income & Growth (221); PBHB Growth Fund (211); MFS Emerging Growth (211) and 20th Century Giftrust (206). And for 10 years: 20th Century Giftrust (738); CGM Capital Development (660); Invesco Strategy, Leisure (556); Invesco Strategy, Health (555) and Fidelity Advisor Equity Growth (537).

NOTES & QUOTES: "Some mutual funds with wretched performance fill their reports with pretty words in an attempt to put a good face on a bad year. The reader's task is to cut to the heart of the matter. If the fund did much worse than others with the same objective, it may be time to sell." (New York Times, May 7, in a story, "Separating Out the Puff in Mutual Fund Reports") . . . "U.S. Savings Bond interest has ended a long skid. Whereas the guaranteed rate for EE bonds held to maturity stood at 7 percent in November, 1990, the rate slipped straight downhill to 4.25 percent in November, 1993, and now has climbed to 4.70 percent." (Treasury Department via USA Today)

HOPEFULLY HELPFUL: "There really is no secret to investing for retirement. The key way is just getting started, and the earlier the better. If you save $1,000 a year from age 30 to 62 and earn 8 percent on your savings, you'll have $145,000 at the end. But if you wait till 45 to start saving, you'll need four times as much, or $4,000 a year, for the same kitty." (Charles Carlson, editor, DRIP Investor Newsletter) . . . "If you intend to leave your IRA to your kids, name them as beneficiaries before required distributions begin. This will extend the distribution schedule, prolonging the tax-free buildup. Whatever you do, don't leave your IRA to your estate. This gives the IRS control over the distribution schedule and robs your heirs of flexibility." (Personal Finance)

MARYLAND MEMOS: "Why We Recommend Buying Even Though We Believe Stocks Are Likely to Fall Further" is a thoughtful piece published by Chapin, Davis & Co. If you telephone David Clogg (435-3200), he will send you the report titled "The Disciplined Contrarian." ("The key to building long-term appreciation is buying good stocks cheap, not jumping in and out; we see a lot of cheap stocks available.") . . . The State of Maryland issues new tax-free bonds tomorrow, rated triple-A. See your broker for details . . . Stocks of Hechinger and Home Federal reached 12-month highs in recent trading; Allied Research, Town & County and Washington Homes touched yearly lows.

MORE MARYLAND: Steve Hanke, professor of applied economics, Johns Hopkins University, co-authors a story in Forbes, May 23, titled, "The Case For Bonds, Now." ("Now is a good time to hold onto your bonds if you are thinking of selling, and to buy bonds if you have some cash on hand.") . . . Under "The Fortune 500 Service Companies," the magazine's May 20 issue lists these local firms: USF&G, First Maryland Bancorp, BGE, Mercantile Bankshares, PHH Corp., Loyola Capital and Giant Food . . . All this week, WBAL-TV (Channel 11) presents "Fiscal Fitness: How to Prepare Financially For Your Children's College Education." During each broadcast, at 6:25 a.m., I'll also tell you how to get copies of the week's programs, plus other helpful hints.

MONEY-MAKERS: "The Dow Jones Utility Average fell 20 percent in the past six months. Now it's time for bargain hunting, and the key is to find utilities in states with enlightened regulators. Pennsylvania is one, so recommendations include DQU (formerly Duquesne Light) and Peco Energy (formerly Philadelphia Electric.) Both yield 5.5 percent." (Forbes) . . . "The recent pummeling of the bond market has pushed yields to attractive levels. It's now a buyer's market." (Personal Finance)

MONEY-SAVERS: "If you carry a credit card balance, pay it off. Even if you pay only 11 percent interest, paying it off equals earning 11 percent, risk-free. Because the interest you pay is nondeductible, paying it off probably results in a 16 percent after-tax saving, assuming you're in the 31 percent bracket. The higher your tax rate and the higher the interest rate, the more sense it makes to pay off credit card balances." (Moneypaper, May) . . . "Save on check printing. Save about half the cost of new checks by ordering directly from the check printer rather than going through your bank." (Dollar Stretching Ideas)

ENDPAPERS: Did you realize that BGE stock now yields 7 percent, Delmarva Power & Light 8.4 percent and Potomac Electric Power 8.6 percent? Each of the utilities' dividends is more than double the current inflation rate . . . "Adjustable-rate mortgage funds may be pulling out of their slump. After a less-than-stellar performance over the last two years, they held up well in the first two months of this tough year, and the future looks promising." (Carole Gould, New York Times) . . . On "Wall Street Week With Louis Rukeyser" Friday, The Professional Tape Reader's Stan Weinstein recommended regional banks, oils, chemicals and REITS. Specifically, he likes British Petroleum, Du Pont, Union Carbide and Baxter Labs.

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