Mixed stocks leave DJI down 3.70


December 06, 1994|By JULIUS WESTHEIMER

Stocks ended mixed yesterday. The Dow Jones industrial average, up 16 points in midmorning trading, slipped 3.70 points to close at 3,741.92, but most other indexes edged higher. Bonds weakened, with the yield on the 2-year Treasury note rising to an appealing 7.56 percent -- 2.6 times the return on the S&P 500 stock average (2.91 percent.)

LOOKING BACK: Speaking of stocks, today marks the 20th anniversary of the end of the worst bear market since the Depression. On Dec. 6, 1974, the Dow Jones industrial average closed at a 12-year low of 577.60, having tumbled 45 percent (from 1,051.70) in less than two years. And, speaking of anniversaries, it was just 40 years ago this fall -- on Nov. 23, 1954, to be exact -- that the Dow index first closed above its 1929 peak of 381.17. Anyone who bought at that peak had a 25-year wait to break even. On the brighter side, studies show that over the long pull, stocks produce an average return of about 12 percent a year, far outperforming bonds, CDs, etc.

LOOKING AHEAD: "Mid-December 'new lows' offer a free lunch because many depressed stocks sell at bargain levels after investors dump losers for tax purposes. We charted NYSE stocks hitting mid-December new lows for many years and found these 'unwanted children' substantially outperforming the market in the months ahead." (1994 Stock Trader's Almanac) . . . "The economy has not slowed enough for the market to get the interest-rate relief it needs." (Morgan Stanley's Perspective) . . . "The 1994 market has gone from being cheap to being expensive." (The Capitalist's Companion.)

MONEY-SAVERS: For a list of the lowest credit-card rates in the country, send $4 to Bankcard Holders of America, 524 Branch Drive, Salem, Va., 24153, or send $5 to CardTrak, Box 1700, Frederick, Md., 21702 . . . "Bonds that have lost value can be sold for major tax savings, and there are plenty of losses out there -- many of 20 percent or more. See your broker for 'swap' ideas." (James Lebenthal, bond trader) . . . "Pay off your credit cards. Credit-card interest is still around 19 to 21 percent, none of it tax deductible. It makes no sense to carry large balances at those rates. If you can't pay all your debts, pay all those high-interest credit card debts with a lower-interest loan, such as from your firm's credit union or with a home-equity loan." (Dollar Stretching Ideas.)

LOCAL HONOR ROLL: Black & Decker is listed in first place under "Projected Earnings-Per-Share Growth in 1995 versus 1994: Household & Personal Care Products," in Financial World, Dec. 6, with B&D's 1995 growth projected at 28 percent. (The local toolmaker appears above such well-known firms as Sunbeam, Gillette, Maytag, Whirlpool, etc.) . . . In the same earnings-per-share growth listing, Bethlehem Steel appears as No. 2 under "Metals & Mining," trailing only Reynolds Metals . . . T. Rowe Price GNMA fund is listed under "Top 10 Mortgage Funds" in the same issue.

MORE ON BALTIMORE: Money magazine's 1995 forecast issue lists Baltimore as No. 34 under "Projected Gain in Housing Prices," with a 2.8 percent rise projected for 1995. The local 1994 median price stands at $118,060, with "Annual Income Needed" shown as $31,000. (Washington, D.C., ranks as No. 24, projected price up 3.3 percent, with median home price shown as $155,600, annual income needed: $40,000) . . . Cheerful Note: Although the year's shortest day is still about two weeks away, tonight in this area marks the year's earliest sunset (4:36 p.m.), with evenings then beginning to brighten. This phenomenon is caused by the elliptical path of the Earth around the sun. On the other side of the clock, sunrise will lag until Jan. 8 . . . Westinghouse stock is recommended by four newsletters followed by Hulbert Financial Digest.

NOTES & QUOTES: "Visit your favorite bank branch soon, before it's gone. Banks are preparing to close thousands of branches as more and more customers are using ATMs and telephone banking. First to go: branches in affluent and middle-class areas." (USA Today) . . . Toys "R" Us stock appears under "Seasonal Beneficiaries We Like" in S.& P. Outlook, Nov. 30 . . . PaineWebber's Marvin Fribush will mail his firm's "Year-End Tax Talk" if you phone him at 576-3220. ("Swap losses for tax savings; lock in profits, defer gains; this is the time for a portfolio review with your broker, etc.") . . . The Kiplinger Washington Letter feels that some tax changes affecting business stand a good chance next year, namely, estate tax relief, deduction for self-employeds' health coverage and easier deductions for home offices.

DECEMBER DIARY: "If you're planning to marry or divorce, consider the tax implications of doing either before year-end. If you and your partner both earn substantial incomes, you will pay less taxes if you file as singles for 1994." (Working Woman, December) . . . "If you can live on your present salary, you can also live on 95 percent of it. So arrange to save 5 percent off the top, perhaps through a payroll deduction that's automatically sent to some kind of savings account." (Donoghue's MoneyLetter) . . . "Congress has approved legislation repealing the prevailing 4 percent guaranteed minimum interest rate on Series EE savings bonds. The aim is to save the government money." (Wall Street Journal)

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