Dow sheds another 14.47 on renewed inflation fears


September 13, 1994|By JULIUS WESTHEIMER

Continuing Friday's 33.65-point slide, the Dow Jones industrial average sank 14.47 more points yesterday and closed at 3,860.34. Investors appeared concerned that today's Consumer Price Index report would indicate further inflation, especially following last week's August producer price figures, up an unexpectedly high six-tenths of one percent.

SEPTEMBER SONGS: Speaking of stocks, two new issues have just popped into the "Dow 5" -- Chevron (replacing American Express) and Minnesota Mining (replacing Eastman Kodak); they join Merck, Sears and Woolworth. Over the past 20 years, an investment in the "Dow 5" returned a 21.2 percent compound annual rate, and the strategy's performance was six times as great as the Dow Jones industrials' advance. In two decades, $10,000 grew to $583,500. (No guarantees for the future) . . . "The average stock has undergone a brutal correction this year. Some well-known indices have declined only five to 10 percent, but half the stocks on the American and Nasdaq markets plunged 22 and 27 percent respectively. If the Fed tightens again, many smaller companies' stocks could be clobbered even more." (Douglas Ramsey, Capital Management.)

BALTIMORE BITS: "We continue to recommend USF&G stock as a Buy. Although the California Supreme Court surprised the property/casualty industry by upholding proposition 103 (which provides rebates to personal auto policyholders in the state), this decision should have no material effect on USF&G because the company writes only a modest amount of personal auto insurance in California." (Legg Mason Research Weekly, Aug. 30) . . . On Tue., Sept. 20, Baltimore Security Analysts present Wolfgang Schoellkopf, vice president and chief financial officer, First Fidelity Bancorporation, at the Sheraton Inner Harbor Hotel at noon.

MARYLAND LINGO: Myron Oppenheimer, vice president of investments for NationsBank, says, "An earnings-driven strategy remains the best in a difficult environment, and we look for companies that can sustain solid earnings gains into 1995." (For the full letter, phone 244-6569). . . David Clogg, manager, Chapin Davis, sends along "Year-End Strategies," which he will mail you if you phone 435-3200. ("Stock prices are driven down at year-end because (1) money managers 'dress up' their portfolios by selling big losers and (2) individuals engage in tax-loss selling. We feel the November/December period offers a good buying opportunity.")

LOCAL CEO CORNER: When I asked Gary Talles, CEO of Baltimore-based Talles Homes, what principles have made his business successful, he responded: "I feel location is everything in the residential building business, and we credit our success to that principle. And we have to watch interest rates closely, too, because rate fluctuations can make or break any builder. Waiting for rates to drop before building houses sounds fine, but when rates do drop, you may have carried the property too long. Also, I try not to get caught by predicting a real estate boom many years away; others have tried it and seen the strategy backfire."

HOPEFULLY HELPFUL: "Many working women should keep a notebook of their own. Research shows that journal-writing and careful documentation of experiences can jump-start a career; women are signing up by the thousands for professional journal-writing workshops." (Working Woman, September). . . "European economies have recovered, foreign corporate profits will boom and the explosion is worth investing in. Rather than venture into foreign stocks, consider buying U.S. stocks with heavy foreign involvement: Compaq Computer, Emerson Electric, Hewlett Packard, Ferro (a specialty chemical maker) and York International (manufacturer of large air-conditioning and refrigeration units.") (Fortune, Sept. 19.)

NOTES & QUOTES: "This month, Southwest Airlines begins testing 'ticketless travel' on certain flights; it's a cost-cutting move that many major airlines are considering. Passengers who make reservations simply get a confirmation number, as they do when they reserve hotel rooms or rental cars." (U.S. News & World Report, Sept. 12) . . . "When going for an important job interview, make a practice run to your potential employer's location to eliminate travel-related surprises on the interview date." (National Business Employment Weekly, Sept. 12) . . . John Pryor, Cockeysville, noting that my birthday fell earlier this month, sent me nostalgia from my birth year, 1916: First-class stamp two cents; milk (half-gallon) 18 cents; baseball ticket 95 cents; dozen eggs 38 cents, new model Ford $250 and a 1916 clipping that reads, "Henry Ford gave equal pay to women at $5 per day."

LAST LINES: Our third-quarter estimated tax payments must be postmarked by midnight, day after tomorrow . . ."Make your own pizza. Too hard? Buy the pizza dough from a local pizza shop, add your own ingredients and bake for about 20 minutes in a 450-degree oven. Cheaper than a delivered pie and maybe tastier too." (Dollar Stretching Ideas). . . The Kiplinger Washington Letter predicts that interest rates will move up as the economy continues to recover. The letter adds that 30-year Treasury bond yields will climb to about 8.25 percent, with 30-year fixed rate mortgages moving near 9.5 percent from the 8.5 percent level

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