Dow plunges 45.75 points, but it still beats 1989


November 22, 1994|By JULIUS WESTHEIMER

Plunging in the final hour, the Dow Jones industrial average sank 45.75 points yesterday, closing at 3,769.51.

Checking back, I found that on Thanksgiving Day five years ago the Dow indicator stood at 2,675.55, and 10 years ago on "turkey day," the thick Sun and Evening Sun showed the blue-chip index at 1,220.30, about 2,550 points below yesterday's close.

TURKEY & GRAVY: "One way to raise your workplace energy is by having five ounces of protein (fish, meat) at lunch to complement a carbohydrate (spaghetti, beans, potatoes, whole-grain bread) diet." (Fortune, Nov. 28) . . . "Good advice to investors: Keep your self-directed IRAs and Keoghs at well-known banks and brokerage firms, and stay away from partnership promoters." (Jane Bryant Quinn) . . . "Most retail stocks are overpriced, but I still recommend Williams Sonoma, Cole's, Auto Zone, and Bed, Bath & Beyond. Also Federated -- the Macy merger makes a lot of sense." (Joseph Ellis, Wall Street's top retail analyst for 18 years) . . . "The Standard & Poor's 500-stock index has risen in the third year of every presidential term since 1943, by a 19 percent average." (Kenneth Fisher, money manager.)

CRANBERRY SAUCE: "If the value of your home is going down, and your property taxes up, not only can you fight your property tax bill, but you can often win.

To challenge your bill, go to your county property assessor's office and get three items: a copy of your property record card, the assessed value of three nearby homes comparable to yours that were sold within the past six months or so, plus the forms you need to pursue your appeal." (The Homeowner's Property Tax Relief Kit by Lawrence Czaplyski, McGraw Hill, $14.95.)

SWEET POTATOES: "Plunge into your first retirement plan. Sure, you're young and have lots of expenses -- clothes for work, furniture and student loan debt. Why worry about retirement now?

Because you have 40 years or so until you call it quits. Start socking $2,000 a year into a tax-deferred plan earning 7 percent when you're 25. If you're in the 28 percent tax bracket ($38,000 to $91,850 for a married couple filing jointly; $22,750 to $51,000 for a single), you could have $255,632 more at age 65 than the poor soul who waited until he/she was 45." (Money, Nov.)

SOUR GRAPES: Legg Mason's Jerry Scheinker sends along "60 Reasons Why People Did Not Invest In The Stock Market," adding, at the end, "$10,000 invested in the S&P 500-stock index in January, 1934, would have been worth nearly $6,627,000 (no misprint) as of March 31, 1994." Some "reasons" for staying out: 1934 depression; war in Europe; Pearl Harbor; Russia explodes H-bomb; Dow tops 360, market too high (1954); Eisenhower heart attack; JFK assassinated; Watergate; worst recession in 40 years (1982); Dow nears 2,000, market too high (1986); savings & loan crisis; Persian Gulf crisis; Dow tops 3,000, market too high (1991.) Mr. Scheinker (486-8010) will mail you the whole list.

INDIGESTION RELIEF: "Half the stocks on the NYSE are down at least 20 percent -- many issues off 30, 40 and 50 percent -- from their 1994 highs. If you own any of them, you may be able to offset capital gains and escape taxes on up to $3,000 of ordinary income by making year-end swaps. In a swap, you create a tax loss by selling a stock that is below its purchase price and reinvesting in a similar issue. For example, selling American Electric Power, yielding 7.6 percent, and buying Allegheny Power System, 7.9 percent, could produce a loss of as much as $1,500 on a $10,000 investment." (Money, Dec.)

MORE GAS-X & TUMS: "In a tax-saving bond swap -- bonds are down much more than stocks this year -- you can change an ugly loss into a beautiful tax deduction. You sell losers to lock in the write-off, then buy back similar bonds to deliver about the same amount of steady income. You take your capital losses without significantly altering your portfolio." (Kiplinger's Personal Finance magazine, Dec.)

PIE AND COFFEE: A. G. Edwards' Patrick Larkin Jr. will mail you his firm's "Tax Saver: How to Cut Taxes and Increase Investment Returns" if you phone him at 547-1131. ("Swap your losses for potential winners; buy tax-free investments; contribute to tax-deferred retirement accounts; give appreciated securities to charity, etc.") . . . "Ask your tax professional whether you should increase your withholding or fourth-quarter estimated tax payment to avoid an underpayment penalty. Also ask if you should accelerate income into 1994 and postpone deductions into 1995 -- or vice-versa." (Money, Dec.)

AFTER-DINNER MINTS: "If you can save 15 percent of your gross annual income, which includes contributions to your 401(k) plan -- you'll be in good financial shape by the time you retire." (Jonathan Pond, author, "The New Century Family Money Book.") . . . "A traditional adjustable-rate mortgage makes more sense than a 30-year fixed-rate mortgage if you plan to move in a few years. The rate on your ARM will likely be lower during that period than the fixed rate." (Peter Miller, Silver Spring, author, "The Common Sense Mortgage.")

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