Steadier dollar, rates help Dow to soar 70.90


August 25, 1994|By JULIUS WESTHEIMER

Building on Tuesday's 24 1/2 -point rally and propelled by lower interest rates and a steadier dollar, the Dow Jones industrial average soared 70.90 points yesterday -- its strongest advance in five months-- and closed at 3,846.73. The Dow now stands 92 1/2 points above its Jan. 1 level.

And where will the stock market go next? Of all the newsletters, opinions, predictions, etc., that I read over the last 10 days, about 70 percent were pessimistic. Samples of both sides:

DOOM & GLOOM: "In a nutshell, you can't have a substantial advance when most stocks do not want to rally. Most stocks are not going up; they are going down. We are in a bear market that will suffer dramatic downside movement, beginning no later than four weeks from now." (Crosscurrents) . . . "The stock market still has a second downward leg, principally because the bond market shows no sign of bottoming." (Kirkpatrick Monthly Overview) . . . "We continue to avoid stocks. Stock values depend on interest rates, and short-term rates especially are going to rise. Stocks will drop 10 percent over the next six months." (Klein-Wolman Investment Letter)

SUNNY SIDE: "When you hear so much negativism, contrary opinion suggests that the market will go the other way. There's good reason for this: The bears are sold out." (Todd Market Timer) . . . "Stocks are headed higher. One factor that hasn't been given due credit is the number of mergers and takeovers lately -- at prices 50 percent higher than previous trades. The companies making these takeover bids know more than the average bear." (Monday Morning Market Memo) . . . "We expect our target of Dow Jones 4,200 will be reached this year." (Wheat First Butcher Singer) . . . "The downside risk is limited to Dow Jones 3,600; any short-term weakness is icing on the cake for investors seeking an outstanding, low-risk opportunity." (Marketimer)

FATTER CHECKBOOKS: And whether the stock market goes up or down, you can increase your annual income by buying stocks of companies that raise their dividends consistently. A recent S&P Outlook (Aug. 17) lists these well-known issues, among others, under "Stocks That Have Paid Dividends for 50 Years or More, and Increased Them in Each of the Last Five Years:" Abbott Labs, Coca-Cola, Colgate-Palmolive, Du Pont, Exxon, General Electric, Gillette, McCormick, Minnesota Mining, Norfolk & Southern, Procter & Gamble, Rubbermaid, Warner-Lambert and many others. An accompanying article says, "Of course past performance is no guarantee of future results but all stocks listed have favorable fundamentals and will continue to beat the market."

BALTIMORE BEAT: "At $20 per share, Rouse Co. stock sells at only 11.8 times our 1994 earnings estimate and 10.4 times our 1995 forecast. We continue to rate Rouse a buy based on attractive valuation, proven management record and favorable growth prospects." (The Patient Investor) . . . "How much of an increase in interest rates the stock market will tolerate remains .. to be seen, but if profits continue to surprise on the upside, it might be more than many people think." (Investment Counselors of Maryland) . . . Legg Mason's August "Research Monthly" runs a five-page buy recommendation on U.S.F.& G. stock, which Gerald Scheinker (484-8010) will mail you . . . Mercantile Bankshares stock hit a 12-month high ($22) in recent trading . . . T. Rowe Price International Stock Fund appears under "The Honor Roll" (Page 132) in Forbes' Aug. 29 cover story, "Best Buys: Forbes Sifts 1,819 Mutual Funds To Help You Pick the Right Ones."

CAREER CORNER: "The extra cost to an employer for each smoker on the payroll is about $1,000 annually." (Inc, September) . . . "I consider it the highest compliment when my employees go out and start their own companies in competition with me. I always send them a plant to wish them well. Of course, it's a cactus." (Norman Brodsky, founder and CEO of Perfect Courier) . . . "As layoffs continue to thin companies' management ranks, some recruiters have become increasingly tolerant of cold calls." (From an article, "How to Win Over Executive Recruiters," in National Business Employment Weekly, Aug. 21-27 issue . . . "Nothing great was ever achieved without enthusiasm." (Ralph Waldo Emerson)

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