Bonds lead stocks higher Dow up 10

The Ticker


Stock prices followed bonds higher yesterday, with the Dow Jones industrial average gaining 10.13 points to close at 3,755.30. The government's 30-year bond moved up about half a point after the Treasury's successful auction of 5-year notes. On Monday, stock exchanges and banks will be closed for Memorial Day.

LOOKING BACK: Speaking of Memorial Day, I checked back to see where the Dow Jones industrial average closed on the day before the end-of-May holiday in past years. Last year 3,527.43; five years ago 2,475.55; a decade ago 1,107.10; 20 years ago 815.65 and 50 years ago 141.24.

LOOKING AHEAD: "Not used to the market's wild daily swings? Better put on a Dramamine patch. History suggests that this could be a very volatile year. The past two years were the least volatile since World War II, and it's interesting to note that nine of the 10 single or low-volatility periods were followed by a high-volatility year, where the trading range exceeded 23 percent. Translation: We could see a 900-point range between the Dow high and low this year." (InvesTech newsletter)

IT'S YOUR MONEY: "The holdings of your bond fund may surprise you. There is a good chance today that any bond fund you buy, or may have bought, has gone beyond plain vanilla bonds into exotic securities known as derivatives. The use of derivatives -- concocted and complicated instruments based on the value of some underlying security -- is growing by leaps and bounds. Used blindly by a fund manager, they certainly can increase the risk of a mutual fund investment." (Financial World) Ticker suggestion: Ask a lot of questions and read the prospectus carefully before buying any bond fund.

PRE-HOLIDAY HASH: "For better garage sales, launder and sort all clothing; hang as much as possible. Price everything to sell fast and don't refuse any reasonable offer. Set up a bargain table with items grouped under 'Your Choice' signs for 50 cents, $1 and $2." (Consumers Digest). . . "Don't keep your car registration in your car. Police computers can now prove ownership without it -- but a thief who breaks in can use it to find out where you live and set up a later robbery." ("Secure From Crime" by bodyguard Craig Fox Huber)

MAY FLOWERS: A survey of 491 firms' stockholders meetings concludes that the gatherings are a waste of corporate time, energy and money -- and also that they're boring." (National Investor Relations Institute) . . . "The Tax Foundation calculates that each American pays $7,927 in taxes each year. By contrast, combined outlays for food, housing, and clothing are just $3,800 per person per year." (Moneypaper) . . . Travel Tip: "If you are a frequent auto renter, join one of the auto rental clubs so you can go directly to your car without waiting in line at the airport counter." (Success, June)

HOPEFULLY HELPFUL: "Here's the idea behind a biweekly mortgage: Instead of making your mortgage payment once a month, make half a payment every two weeks. That totals 26 payments a year, the equivalent of 13 monthly payments rather than 12 -- and that's the magic. For example, on a $100,000, 30-year loan at 10 percent, you'd pay total interest of $215,314 using monthly payments. With a biweekly schedule, you'd cut the interest to $137,679 -- a savings of $77,635! The plan is especially convenient for people who are paid every other week." (Jim Henderson, mortgage specialist)

LOCAL LINGO: Black and Decker appears on Legg Mason's latest (May) "Recommended List for Capital Appreciation.". . . Tomorrow night, "Wall Street Week With Louis Rukeyser" is titled, "Is The End Near for Tobacco Stocks?" with guest Marc I. Cohen, beverage/tobacco analyst at Goldman Sachs, and panelists Ralph Acampora, Frank Cappiello and Mr. Ticker. . . . The T. Rowe Price New Income Fund appears in "Personal Finance" newsletter under "Mutual Funds For Investors Who Seek Capital Appreciation and Current Income.". . . Next week, I will broadcast a five-part series on WBAL Radio called "How to Invest Your Money: Lessons I Have Learned Over The Years." The programs will air at 4:52 p.m. and 5:52 p.m. each weekday.

THE DARK SIDE: "In the eight major declines we've had since the end of World War II, the Dow Jones utilities have fallen roughly 88.5 percent as much as the industrials. The utilities peaked last August 31, and between that time and May 12 of this year, they lost a bit over 31 percent. Therefore, even if the recent low of 177.04 turns out to be the final low for the Dow Jones utility average, the Dow industrials will likely decline another 1,062 points to a final bottom of 2,598 in late July before the bear market is over." (Michael O'Higgins, O'Higgins Asset Management, in Barron's, May 23)

SUN ALSO RISES: "The aggressive growth sector of the market is presently making a very significant bottom, and this should set up a very nice advance in that area -- and the market as a whole -- this summer." (Walter Deemer's Strategies and Insights) . . . "When bonds and utilities start acting better, the stock market won't be far behind. By our calculations, the tightening phase of the Fed should be almost over with." (Wall Street Generalist)

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