Market recovers from slide Dow off 2


January 24, 1995|By JULIUS WESTHEIMER

Stocks recovered from a steep morning slide yesterday and ended the day almost even. The Dow Jones industrial average, off 28 points at midday, closed with a 2.02 point loss at 3,867.41. Wall Street began its recovery when House Speaker Newt Gingrich said he thought President Clinton's Mexican aid bill would pass Congress.

CHEERFUL OUTLOOK: Speaking of stocks, the latest Rothschild-Pell Rudman Letter is worth reading. Highlights: "In 1994 the S&P 500 index and the Dow Jones industrials gained 1.3 and 5.9 percent, but these figures mask wide individual stock variations. Sixty percent of the S&P stocks declined, and 70 percent of NYSE issues were lower at year-end than on Jan. 1. However, we remain optimistic for 1995 because of pervasive pessimism, the gradually slowing economy, attractive relative valuations and the likelihood of a capital gains tax cut." (Write Research Director Mark Felder, c/o Rothschild Pell-Rudman, 32 South St., Baltimore 21202, for the full letter.)

HOPEFULLY HELPFUL: "Orange County's financial disaster has presented an opportunity for shrewd investors. It has produced near paranoia in municipal bonds, causing unthinking investors to dump perfectly good tax-frees. Closed-end municipal bond funds have been among the hardest hit, and many now trade at major discounts to net asset value and pay well above-average, tax-free yields." (David Dreman in Forbes, Jan. 30)

GET BUSY! Only six days remain to enter our 1995 Dow Jones forecasting contest, with dinners and lunches with Mr. and Mrs. Ticker as prizes, plus 10 hardback books about money. Complete details again in Thursday's Ticker, Jan. 26.

JANUARY JOURNAL: "You purchase life insurance to protect your loved ones if you should die too soon. You buy annuities to protect yourself if you live too long." (Middle Fixed-Income Letter) . . . "A nondeductible IRA is a valuable investment. Even though you don't get a tax deduction, returns earned within the IRA compound tax-free until you withdraw them. Then you owe tax only on withdrawn earnings." (Jonathan Pond, financial planner)

TAX TIP: "It's not too early to think about your taxes. The IRS help line (1-800-829-1040, 7:30 a.m. to 5:30 p.m., seven days a week) is already open, and you won't have much trouble getting through if you call now. But, if you're a traditionally late-filer, here's good news: Because April 15 falls on a Saturday, returns aren't due until the 17th." (Smart Money, February)

DO & DON'T: Here are retirement "Things To Do And Not To Do," from the Lincoln National Investment Letter: "Do maximize your contribution to your 401(k); it cuts your taxable income and allows your money to grow tax-deferred. . . . Don't put all your money in 'safe' investments such as CDs or guaranteed investment contracts; they won't keep up with inflation. . . . Do find out how much you'll get from Social Security by calling 1-800-772-1213 and asking for 'Request for Earnings and Benefits Statement.' . . . Don't save for a child's education before you save for your own retirement."

TRYING TO SAVE? "Saving money for the sake of saving is a losing game," says Working Woman, January. The article explains, "But if you're saving money for a specific goal -- a cashmere coat, renovating the kitchen, driving a sportier car or building a retirement nest egg -- much of the distaste melts away. If your goal is a new car, for example, sit in the model you want, take it for a test drive and find out everything about it. Then set a weekly, not a monthly or yearly, savings rate to make the amount as manageable as possible."

WARNING: "Disability insurance is your second most important form of insurance, after health insurance. Yet the coverage most people have is inadequate. Reasonable: A policy that pays 60 percent of your income after a period of 90 to 180 days. The longer the waiting period, the lower the premium. Choose the longest one that you can afford. Strategy: Seek a discount through a policy offered by a trade, professional or other association." (Irving Blackmun, New York CPA)

RED FACE: "Robert L. Citron's winning record as Orange County's treasurer-tax collector is good enough that he deserves re-election." (Los Angeles Times editorial page, May 24, 1994)

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