Market watches, waits for Fed's move

The Ticker

July 07, 1994|By Julius Westheimer

The Dow Jones industrial average climbed 22.02 points yesterday, closing at 3,674.50, on below-average volume of 233 million shares. Many investors appeared to be waiting for the Federal Reserve's reaction to the June unemployment figures, which will be released tomorrow morning.

FROM THE TOP: Speaking of stocks, Douglas Johnson, portfolio manager of the SAFECO Equity Fund, the recent top-performing growth and income fund in the country, shared his investment strategy on "Wall $treet Week With Louis Rukeyser" Friday. Excerpts: "Buy down-and-out company stocks, where there are no high expectations or huge loss possibilities . . . We stay 100 percent invested all the time; if we want to buy something, we sell something else . . . Some of our favorites now are GTE, Schlumberger, Dresser, and Anthem Electronics . . . I worry about electric utilities' possible dividend cuts, and I suggest telephone utilities instead. Also, depressed drug stocks have lots of potential, like Schering-Plough and Warner Lambert."

NOTES & QUOTES: "If you want to know how good your advertising is, ask your bookkeeper." (Joseph Katz, a top Baltimore advertising man many years ago) . . . "Whatever you call it, the dollar's decline is a clear opportunity for many of America's global companies because U.S. products and services have suddenly become less expensive overseas." (Quotation from Business Week, July 11, which mentions, as examples, Caterpillar, General Motors, Du Pont, etc.) . . . "Millions of investors learned, in this year's first half, that stocks can go down two quarters in a row. They can hardly be blamed for their ignorance of that possibility, since it hasn't happened for 10 years." (Alan Abelson, Barron's columnist.)

LOCAL LINE: Baltimore Gas and Electric Co. is listed under "One Dozen Utilities to Watch" in Smart Money. Some others listed are Dominion Resources, Duke Power, San Diego G&E and Wisconsin Energy. ("Nearly all of these companies will enjoy an earnings boost from last winter's cold weather.") . . . S&P Outlook also comments favorably on BGE, stating, "This company's industrial rates are not particularly high and its dividend payout ratio for 1994 is below the industry's norm. Stock merits retention." . . . "We believe Star Banc deserves at least a group price-earnings multiple, which suggests a price range of 40-41, four to seven percent above the current level." (Alex. Brown research report.)

BALTIMORE MAILBAG: Myron Oppenheimer, vice president, NationsBank, will mail his firm's July "Investment Policy" if you phone 244-6569. ("Stocks are expected to make modest progress but this will be accompanied by major fluctuations as investors become too optimistic or pessimistic about profits, inflation and the political backdrop.") . . . Gerald Scheinker (486-8010) will mail Legg Mason's 34-page Mid-Atlantic Bank and Thrift Quarterly. ("Conventional wisdom says bank stocks do not do well with rising interest rates, but that theory has been set on its head. Between March and May, Fed funds rose by one full percentage point and the prime rate climbed from 6 to 7 1/4 percent. In that period, our bank and thrift indices rose 5.1 and 10.8 percent, respectively, outperforming the S&P 500 by a wide margin.")

MARYLAND MEMO: "In 1924, Herbert Schmitz fled Germany and headed for America, the land of opportunity. But when his grandson went searching for fortune 68 years later, the U.S. got left behind. In 1992, Michael Schmitz, now 31, quit his job at a Rockville, Md., grocery chain and settled in Buenos Aires, where his wife was born. That year the couple founded a computer distribution firm -- a smart move, as sales exceeded $1 million in 1993. Schmitz says, 'I thought it would be easier to make my fortune in a smaller economy.' They live in a penthouse apartment in Buenos Aires' trendy San Telmo district." (Money, July, in a a cover story, "America's New Brain Drain; Why People Like You Are Moving Overseas For Good.")

JULY JOURNAL: Almost one in every six jobs in the U.S. pays below the poverty line for a family of four, or $14,228 a year . . . "If you are thinking of investing $120,000, split it into 12 portions and invest $10,000 each month. This 'dollar-cost averaging' is the best approach -- putting a set amount into stocks at periodic intervals." (Charles Royce, Royce Premier Fund) . . . The Kiplinger Washington Letter (July 1) says that inadequate retirement savings are causing concern, adding that about one in five households has no savings and of those that do, the median value is only $10,000.

YOUR MONEY: "There are two ways to keep a child supplied with spending money; by doling it out as a weekly allowance or by letting the child earn money. Earning is better because of the valuable lesson it imparts of the relationship between work and reward. Here are money-making ideas for children: Wake-up caller, price shopper for people who don't have the time to find the best prices, help for the elderly, flyer distributor in your neighborhood and disc jockey." (Dollar Stretching Ideas) . . . "Regarding insurance, five things that can cost you money are: Being freshly divorced, owning a radar detector, making claims for glass breakage or other damage not related to an accident, being popular with the wrong crowd (car thieves) and not shopping around for the best deals." (Smart Money) . . . "Doing business without advertising is like winking at a girl in the dark. You know what you're doing, but nobody else does." (Steuart Britt, 1956.)

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