Investors wait to see how well Treasuries do

The Ticker

August 04, 1994|By Julius Westheimer

In the second day of its mini-slide after a three-day, 78-point rally, the Dow Jones industrial average slipped 3.56 points yesterday and closed at 3,792.66. Investors frightened by the up-and-down stock market appeared to be awaiting the Treasury's auction next week of three- and 10-year notes and a 30 1/4 -year bond. Call your broker or the Baltimore Federal Reserve branch at 410-576-3553 for details.

MIDSUMMER MEMOS: Partly dispelling gloom about the sagging U.S. dollar, the S&P Outlook says, "Dollar Slide Could Benefit Companies With Large Japanese or German Exposure," naming as beneficiaries: AFLAC, Apple Computer, Browning-Ferris, Coca-Cola, Dow Chemical, General Motors and IBM . . . ."In business, appearances are important, but appearances not backed by substance will be uncovered. Instead of thinking, 'How will this make me look to the bosses?' ask yourself 'Is this in the best interests of my company?' " (Diane Tracy, author, "Take This Job and Love It.")

TAX TIPS: "Fight Back! Don't be intimidated by the IRS," says Tax Hotline, August. Excerpts: "Never sign an IRS paper unless you fully understand it, or you may waive your rights . . . Never volunteer anything during an audit and refrain from personal 'small talk.' Telling about your new car, child's wedding, etc., may make an auditor wonder where that money came from . . . Since you are allowed 'reasonable reschedulings,' don't rush to meet your auditor. The IRS time clock runs from the date when your case is assigned, so the longer an auditor holds onto your case, the more pressure he or she feels to close it . . . Make auditors show you Tax Code provisions they're challenging you on . . . If dissatisfied, you have the right to go to an auditor's supervisor."

BALTIMORE BEAT: "Overall, the market seems fairly priced. The average P/E ratio for listed stocks is roughly 15 times current earnings, about average for this century. Winning stocks should include undervalued equities where earnings gains can be predicted for several years." (Ernest Kiehne, Legg Mason) . . . "Regarding Eagle Hardware and Garden, we have revised our earnings estimates downward for fiscal 1994 and 1995 to reflect new thinking regarding the competitive landscape." (Alex. Brown, in Barron's, Aug. 1) . . . U.S. News & World Report, Aug. 8, lists T. Rowe Price New Horizons Fund under "Picks From The Pros."

MONEY MATTERS: "Moving-and-storage auctions are good sources of household, office furniture, etc., at low cost. Movers and mini-storage companies hold auctions of unclaimed inventory every few months. To find auctions, check listings in newspaper classified ads, or call local storage or auction companies." ("Solving Your Financial Problems" by Richard Strohm, $8.95) . . . Standard & Poor's warns that average dividend yields on stocks have sunk from 6 percent in 1982, before the big rally, to 2.5 percent now, often considered a dangerously low payout level.

NOTES & QUOTES: "Regarding hedge funds, the collapse continues. Virtually all of the well-known names are down big-time this year." (Financial World, Aug. 2) . . . Tomorrow night, "Wall Street Week With Louis Rukeyser" discusses "Key Summer Travel Industries," with guests Stephen Girsky, auto analyst at PaineWebber; Paul Karos, airline analyst at First Boston Corp. and John Rohs, hotel/restaurant analyst at Wertheim Schroder & Co . . . ."I make progress by listening to people who are smarter than I am. And everyone is smarter about something than I am." (Henry Kaiser)

HOPEFULLY HELPFUL: "Investors have short memories -- and in those who invest in mutual funds, it's an understandable flaw. In the past four years millions of people flocked to funds, and the billions of dollars they invested fueled torrid stock and bond rallies. Many mutual fund buyers raked in money -- until this year. Investors should now heed this lesson from the old days: Don't invest in any fund unless it has an excellent five-year record. One short-term 'U.S. Government Income Fund,' launched to bring a higher yield than money market funds, was loaded with volatile securities and lost 7.7 percent." (Business Week, Aug. 8.)

NEW TRENDS: Did you know that more men (and women) are enjoying cigars again? Forbes, Aug. 1, says, "Sales of premium cigars (priced from $1 to $5 each and up) are not up to Rush Limbaugh's ratings, but they are growing nicely. From 1989 through 1993 annual sales rose 24 percent." . . . "Maybe I'm just an old fogey, but I'd think twice and then take a cold shower before investing in foreign stocks these days." (Laszlo Birinyi, financial adviser) . . . As of this month, there are more mutual funds in existence (3,045) than there are common stocks on the New York Stock Exchange (2,453).

WALL ST. WATCH: "The high level of unchanged stocks shows that the slow rise since the February-April drop has no conviction and is therefore dangerous." (Technical Trends) . . . "The market should ultimately respond to the flood of good earnings reports with a rally, as investors realize second-quarter earnings will repeat in the next few quarters as well." (Walter Deemer's Strategies and Insights) . . . "Today's stock market is poised to climb the 'wall of worry.' Earnings continue to escalate, insiders are buying stock at the heaviest rate since 1991, and we feel a good rally is ahead." (James Investment Research)

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