Dow slips 1.68, ending three-day winning streak


October 13, 1994|By JULIUS WESTHEIMER

As investors anxiously awaited today's producer price report, the Dow Jones industrial average snapped a three-day, 101-point winning streak yesterday and slipped 1.68 points to close at 3,875.15. The Dow now stands 2 1/2 percent below its all-time peak and 8 1/2 percent above its 12-month low.

AND NOW WHERE? "Stocks look cheaper now than they have since 1992. The economy is slowing but will expand at a healthy 3 percent rate; stocks are likely to reach record highs in 1995, with the Dow Jones average soaring above 4,000. Price-earnings ratios on Dow stocks have plummeted." (Michael Sivy, financial analyst) . . . "What would Warren Buffett and Benjamin Graham say about today's stock market, bond market and speculation? Neither would be bullish, and neither would we. In a market on the brink, be cautious or cynical -- or both." (J W Charles Market Update) . . . "We're nearing the end of the bearish phase of the investment cycle. Interest rates are nearing a peak, and the stock market usually hits its lows at about the same time that interest rates peak. Stocks look cheap." (Bob Carlson's Retirement Watch.)

BUT WHICH STOCKS? The Rothschild Co., in its latest "Letter to Clients," says, in part, "We tend not to look at the market as being divided into growth stocks and value stocks. There are inexpensive growth stocks and overpriced cyclical issues. In our view, a stock with consistent earnings growth, a good balance sheet, high return-on-equity, and the ability to continue to grow profitably is a very good value if it sells at a market-average price-earnings ratio or below. There is no question that such a stock is a 'growth' stock, but because of its attractive valuation, it is a value stock as well." Call (410) 539-4660 for the letter.

BALTIMORE BEAT: "Under the heading, "Thanksgiving Travel: Cheap," U.S. News & World Report, Oct. 10, says, "This fall, flying could be nearly as affordable as driving. Southwest Airlines last week chopped fares by an average of 50 percent on flights to 44 cities. For example, the new sale cuts the round-trip fare between Baltimore and Cleveland from $108 to $48." . . . The T. Rowe Price New Asia Fund and International Discovery Fund appear under "Top-Performing Emerging Market Funds" in Financial World, Oct. 11. . . . Legg Mason's latest " Recommended Stocks" list includes USF&G Corp. . . . Ferris Baker Watts' Michael Dougherty will mail an eight-page brochure, "Total Stock Management," with a full explanation of the "Dow 5" strategy, if you phone him at (410) 659-4677.

MORE ON BALTIMORE: "The U.S. stock market will grow stronger over the next decade, but foreign markets should perform substantially better. A diversified growth portfolio will achieve the greatest gains by spreading investments in the U.S., Latin America and Asia, with substantially greater emphasis on Asia." (Dean Witter's "Global Investing For Long-Term Performance," which Stephen Stauffer, at (410) 592-3164, will mail you.) . . . On Tuesday, Oct. 25, Baltimore Security Analysts Society presents Robert Campbell, chairman of the Sun Co., at the Stouffer Harborplace Hotel at noon. On the horizon: Nov. 2, Bankruptcy panel; Nov. 16, Rite Aid; Nov. 22, Newell Co.

HOPEFULLY HELPFUL: "Putting your will in your safe-deposit box isn't the right way to keep it secure. Reason: Many states limit access to safe-deposit boxes when a box-holder dies, causing inconvenience to families and lawyers. Better strategy: Keep a copy of your will at home and leave the original with your attorney. Also, destroy old wills and drafts; they can lead to disputes among heirs." (Wall Street Journal)

AUTUMN LEAVES: "To calculate what your EE savings bonds are worth, request the table of savings bond redemption values, Form PD, from Savings Bond Marketing Office, 800 K St. N.W., Washington, D.C. 20226. Look up your bond by issue date and the table will tell you its worth to the penny." (Kiplinger's Personal Finance Magazine, Nov.) . . . "A holiday ham soon could cost less than after-dinner coffee; hog prices have plunged 29 percent since January, with no bottom in sight." (Business Week, Oct. 17) . . . Tomorrow night, "Wall Street Week With Louis Rukeyser" is titled, "Back to Basics?" with analysts in the steel, forest products and chemical industries.

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