Rising dollar, bonds cheer investors


January 05, 1995|By JULIUS WESTHEIMER

Encouraged by a strong dollar and higher bond prices, investors pushed stocks up yesterday in heavy trading. The Dow Jones industrial average climbed 19.17 points and closed at 3,857.65, breaking through what many technicians called the 3,850 "ceiling."

LOOKING AHEAD: "The bear market that started at the end of January will continue well into 1995." (Pep Talk) . . . "One more tightening of the screws by Alan Greenspan could shave 10-15 percent off the Dow Jones average." (Ripples in The Wave) . . . "A continuation of economic growth during 1995 could very well ignite a small-cap stock rally not seen since the mid-1970s." (Investment Horizons) . . . "As long as the Dow Jones industrial average and the S&P 500 hold their April, 1994, lows of 3,552.18 and 435.86, respectively, we don't see a bear market coming." (Windham Financial Services' Investment Digest)

JANUARY JOURNAL: January in Wall Street has historically been a strong "up" month, with the S&P 500-stock index rising an average 1.5 percent over the past 44 years, ranking second only to December, up 1.8 percent.

Asked "What Will Be the Highest-Return Investment in 1995?" a recent Business Week survey found these percentages: 51 percent favored stocks; 18 percent bonds; 15 percent real estate and 16 percent commodities.

"As rates marched steadily upward in 1994, consumers watched their mortgage and installment-loan costs rise, but these increased payments were partly offset by higher savings returns." (Goldman Sachs Economic Report)

GOOD ADVICE: "Don't use children's funds as your own or you may lose them.

"Case: John Smith (not his real name) opened brokerage accounts for his children under the Uniform Gifts to Minors Act and put large amounts of money in them. When he ran up a big tax bill, the I.R.S. took the money.

"Although Mr. Smith argued that the money was his children's and not his, the Tax Court decided that Mr. Smith retained investment control and made withdrawals for his own purposes, and since he treated the money as his own, the IRS could treat it that way -- and seize it." (Tax Hotline)

HOW DID YOU DO? Here are results of investing in or holding some widely held local stocks last year.

Figures following each stock are 1994 percentage gains or losses: BGE, down 12 percent; Black & Decker, up 20; Bethlehem Steel, off 12; Delmarva Power & Light, down 23; Mercantile Bankshares, up 3; Merry-Go-Round, down 60; Potomac Electric Power, minus 31; Procter & Gamble, up 9; USF&G, down 7; Westinghouse, off 13. (Figures rounded.)

For comparison purposes, last year the Dow Jones industrial average inched up 2.1 percent and the S&P 500 stock index edged ahead 1.5 percent.

NEW YEAR NOTES: If you had invested $10,000 in the following categories one year ago this week, your investment would now be worth: In foreign stocks $11,239; money market fund $10,481; U.S. stocks $10,100; gold $9,675; Treasury bonds $9,028. (Data from Business Week, Jan. 9) . . . Tomorrow night, "Wall Street Week With Louis Rukeyser" is entitled, "How Does It Look For 1995?" with guest Charles Clough Jr., chief investment strategist at Merrill Lynch, and panelists Alan Bond, Frank Cappiello and Mr. Ticker.

In next Tuesday's Ticker, we will open our new Dow Jones forecasting contest, along with 1995 year-end predictions by more than 35 so-called "experts" -- bankers, brokers, media stars, etc.

MARYLAND MEMOS: The Calvert Group, Bethesda, offers two free educational booklets, "Investing Your Way: A Personal Economy and Investment Guide for Women" and "A Personal Economy and Financial Program for Women." An ad reads, "These booklets (800 SHE INVESTS) [1-800- 743-4683] offer women -- who earn less but live longer than men -- a primer on stocks, mutual funds, etc."

"Eastern Savings Bank, Hunt Valley, Md." is listed under "Top U.S. Savings Deposit Yields for Five-Year CDs" in Barron's, Jan. 2. The "recent rate" is quoted at 7.53 percent, "effective yield" 7.80 percent. . . . "Regarding USF&G, we applaud the acquisition of Victoria Financial Corporation and believe the locally based insurer paid a fair price. We anticipate strong earnings growth and improving balance sheet fundamentals." (Legg Mason Research Weekly)

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