Good year for stock market, history says

THE TICKER

January 17, 1995|By JULIUS WESTHEIMER

Building on Friday's 49-point rally, stocks moved higher again yesterday as the Dow Jones industrial average climbed 23.88 points to close at 3,932.34. At that level, the Dow stands 385 points, or 10.7 percent, above its 12-month low (3,593.35) and only 46 points, or 1.1 percent, below its all-time high (3,978.36.)

MIDWINTER CHEER: "If history holds, this should be a good year for the stock market. Here are annual percentage gains in the S& P 500-stock index during the year before a president faces re-election: 1955: 26 percent . . . 1963: 19 . . . 1967: 20 . . . 1971: 11 . . . 1979: 12 . . . 1983: 17 . . . 1991: 26." (Birinyi Associates) . . . "The third year (1995) of the presidential cycle is the strongest, with the S&P index not declining since 1939 and advancing an average of 18 percent. Plus, the fifth year of the decennial cycle has been the market's strongest in each decade since 1885." (The Kon-Lin Letter)

HOPEFULLY HELPFUL: "For the past 40 years, 10-year Treasury yields averaged 2.5 percentage points above the inflation rate. Today, with 10-year Treasuries paying around 7.7 percent and the latest inflation data 3.6 percent, that spread is an attractive 4.1 percentage points." (Moneypaper) . . . "If you sell stocks at a loss, you must wait 30 days to buy them back or the IRS denies you a loss under 'wash sale' rules. But you can buy those stocks right away for your retirement account and still claim the capital loss." (Your Money)

MONEY-SAVER: "To compete with credit cards that offer rebates, credit unions now spice up their plain-vanilla plastic with many freebies. The Credit Union National Association recently unveiled a new program called Purchase Rewards. Cardholders earn one point for every dollar charged and can redeem points for bonuses such as a one-day Alamo car rental, an Argus camera (2,000 points each), a $60 Lands' End gift certificate (6,000 points) or an American Airlines companion ticket (20,000 points). Any of the 2,500 credit unions whose cards are processed by CUNA can add the benefit to their plastic." (U.S. News & World Report, Jan. 16)

LOCAL HONOR ROLL: McCormick & Co. is listed under "Rising Stars" in S&P Outlook, Jan. 11. The text, under "Five Star Stocks in the News," reads, in part, "Although McCormick stock tumbled more than 25 percent in 1994, we believe the firm's raw material and Mexican venture problems are transitory. We are raising our investment opinion and rate the stock a strong buy."

CAREER CORNER: Working Woman, January issue, runs a "Road Map to The Top." Excerpts: "In your 20s, gain experience that shows you have the tools to be a good employee. In your 30s, demonstrate the ability to operate and accomplish things through people rather than doing it all yourself. In your 40s, you want to move from running a team executing someone else's vision to creating the vision. To avoid getting too settled, do one thing every year that makes you uncomfortable. If you're scared of public speaking, join Toastmasters."

Ticker Suggestion: To avoid stage fright, mingle with your audience before your talk; you'll find your listeners to be surprisingly friendly, and their warmth will help you do well.

CONTEST UPDATE: If you want to have dinner for two as guests of Mr. and Mrs. Ticker, enter our 1995 stock market contest, now underway. Runner-up, ditto for lunch, and the next 10 receive hardback books about investing. Send your prediction for the Dow Jones industrial average closing (no decimals) of Dec. 31, 1995, on a postcard (no letters accepted) to Julius Westheimer, Ticker Contest, Business News Dept., 5th floor, The Baltimore Sun, 501 N. Calvert St., Baltimore 21278. Give reasons if you wish, but they are not required. Your postcard must be postmarked by midnight, Sunday, Jan. 29. Get busy!

LOCAL LINE: T. Rowe Price International Stock Fund and Science & Technology Fund are listed under "The Numbers on Low-Minimum Funds" in Kiplinger's Personal Finance magazine, February issue. Each fund has a $2,500 minimum. Over a three-year period, the International Fund showed a 12.9 percent annualized total return (growth plus income) and the Science & Technology Fund reported a 24.1 percent total return. Dial 1-800-638-5660 for details.

On Wednesday, Jan. 25, Baltimore Security Analysts present Vinod Sethi, portfolio manager of Morgan Stanley India Fund, at Stouffer Hotel at noon . . . Stocks of Alex. Brown and Danaher reached 12-month highs in recent trading; Cosmetic Center "B" sank to a yearly low.

WALL ST. WATCH: "This will be a good year. Earnings will rise and interest rates could even decline. The Fed is almost through tightening credit, and people should buy long-term bonds now and lock in these high yields." (Carter Randall, adviser) . . . "I'm still bullish. It would be very significant if the Dow climbed over 4,000, but for that we need lower interest rates. Wall Street needs the Fed to stop tightening." (Gail Dudack, technician.) "The Dow may scale 4,000 but by year end, it will sink to 3,600 as the Fed hikes rates again." (Maceo Sloan, adviser.) Above three quotes from Friday's "Wall Street Week With Louis Rukeyser."

"By midyear, we expect the sun to shine through the clouds and reveal a market headed toward Dow Jones 4,200-4,400 in the second half." (Dean Witter Investment Strategy) . . . "While short-term rates are likely to rise farther, we have probably seen the bulk of the hike in long-term rates." (DLJ Factbook.)

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