Dow industrials off 17 for a 4-day loss of 102 points


September 22, 1994|By JULIUS WESTHEIMER

Raising its four-day loss to 102 points, the Dow Jones industrial average fell 17.49 points yesterday and closed at 3,851.60. Interest rate fears weighed heavily on stocks, especially in view of the Federal Reserve's Open Market Committee meeting next week. But Nomura Securities' Carmine Gregoli said on CNBC-TV after yesterday's close, "Third-quarter earnings will come in very strong; I still predict Dow Jones 4,500 by mid-1995."

FASTEN SEAT BELT: "New highs in bond yields as the economy barrels ahead. Dollar under pressure as higher U.S. interest rates fail to offset effects of a worsening external deficit and rising rates abroad. And the stock market nears its all-time high. That scenario played out in late summer and fall of 1987, just before the 508-point crash, but it seems as if it occurred only yesterday. Reason? All these factors came together again last week. Sounds like another October Classic, but this year it won't be the World Series." (Randall Forsyth, in a Barron's article Sept. 19, "Deja Vu All Over Again: The Latest Market Scenario Mirrors the Late Summer of 1987") The issue is on newsstands this week.

NOW CHEER UP: "After a six-month snooze, the most explosive U.S. performers -- stocks of small companies -- are suddenly stirring again. The Russell 2000 index of small stocks bounced 7 percent since June, capped by a 3 percent spurt in the last two weeks of August. Better yet, analysts see this summer's rebound as a mere warm-up for the second leg of a powerful small-stock rally that could allow the small fry to gain an additional 70 percent over the next several years." (Money, October, in an article, "Eight Small Stocks For Big Gains")

The above article lists these small-stock favorites: Atmel, Franklin Quest, Genesis Health Ventures, FIserv (pronounced fie-serve), Quantum Health Resources, Systems Software Associates, Watson Pharmaceuticals and Watts Industries.

BUSINESS BEAT: "In a Harvard study, people who ate turkey were able to concentrate and perform business tasks nearly twice as well as those who consumed food that was almost pure carbohydrate, namely sugar, sherbet, starches, and cellulose. And if you're at a business luncheon, it's a mistake to fill up on rolls while waiting for your main course." (Men's Health, October) . . . "Did you know that smokers work one month less a year than nonsmokers because of smoke-breaks? The average smoker takes four 10-minute breaks a day, adding up to one month less work annually." (Society for Human Resource Management)

DOW 5 UPDATED: In response to many of your requests, here is the latest "Dow 5" list of stocks, namely, the five lowest-priced of the 10 highest-yielding issues of the Dow Jones industrial average: Chevron, Du Pont, Merck, Sears, Roebuck and Woolworth. Beginning 20 years ago, a $10,000 investment in the "Dow 5" -- rearranged each year if necessary to fit the strategy -- grew to $583,500, an annual 21.2 percent compound growth rate. And, better yet, you never add money to your original investment. As one local broker put it, "These are all high-quality companies with severe problems."

LOCAL ADVICE: David Solomon, editor of Nutz and Boltz, published in Butler, writes, "When buying a new car, your first offer should be the dealer cost. Fair markup for cars costing up to $15,000 is between $300 and $500, for more expensive cars between $500 and $2,000.

To find out dealer cost, dial Intellechoice (1-800-227-2665), the only car-pricing service that includes real-world repair record data instead of reader-survey repair data. Price $14.95 for a report on a single model, including costs of optional features. Add $19.95 for a comparison report of two models that interest you."

TAX-DEFERRED GROWTH: "Variable life insurance is now the hottest-selling insurance product. Part of the premium buys an insurance benefit while the rest is put in investment funds that the insurer projects may earn as much 12 percent annually -- with gains tax-deferred until withdrawn. Catch: Administrative JTC costs are higher than on other types of life insurance." (Glenn Daily, author, "Life Insurance Sense and Nonsense," $10)

SPEAK LOW: "Learn to talk to the IRS without saying anything. Many times, the agent examining your tax return knows very little about you. For instance, he/she does not know if you take expensive vacations, send your children to a costly college, etc. Discussions between a taxpayer and the IRS should be avoided, and that's why it's wise to retain an accountant or attorney to represent you.

"But, if you find yourself face-to-face with a revenue agent, talk about his/her lifestyle, not yours." (Tax Hotline, September)

BALTIMORE & BEYOND: Black & Decker and USF&G appear on Legg Mason's September "Recommended List" . . . Oops! In Tuesday's Ticker, when I mentioned my TV "Tip-of-The-Day" time (6:15 a.m.), I inadvertently forgot to say that it's on WBAL-TV (Channel 11) . . . On Wednesday, Oct. 5, Leonard Quill, chairman, and Ted Cecala, chief financial officer of Wilmington Trust Co., will address the Baltimore Security Analysts Society at noon in the Hyatt Regency Inner Harbor Hotel . . . "Travel Tip: When flying this winter, try to route yourself through good-weather hubs like Dallas-Fort Worth, Houston or Las Vegas rather than through airports with weather problems -- Chicago, Denver, New York, Detroit, Boston, etc." (Consumer Reports Travel Letter)

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