Stocks dip on news of higher prices

THE TICKER

March 16, 1995|By JULIUS WESTHEIMER

Stocks edged lower yesterday after the government reported higher-than-expected February producer prices and stronger-than-anticipated industrial production and factory utilization.

The Dow Jones industrial average slipped 10.38 points and closed at 4,038.37, still 204 points, or 5.3 percent, above its Jan. 1 level.

MID-MONTH QUOTES: "An unpleasant earnings surprise will kill a high price-earnings stock but scarcely touch a low P/E issue." (David Dreman, investment manager) . . . "It's just a number." (Wall Street guru John Neff when the Dow Jones average hit a record 4,000 a few weeks ago) . . . "The Federal Reserve may not raise interest rates again. It may be content to wait to see if new inflation pressures appear, rather than try to pre-empt them as it has so far." (Investment Counselors of Maryland, Craig Lewis.)

YOUR MONEY: "A 20 percent return compounded doubles your money in less than four years. And, by contrast, a 100 percent gain followed by a 50 percent loss over the same period brings you out just even." (Forbes, March 22.)

"When the Dow Jones industrial average first crossed 3,000 on April 17, 1991, stock mutual fund cash levels stood at $28 billion. Today, at over 4,000, cash stands at $74 billion. Both figures represent about 8 percent of assets." (Moneypaper.)

SPRING READING: Speaking of investments, here are a few new books for your consideration: "The Warren Buffett Way" by Robert G. Hagstrom, $24.95, a volume from which you can learn the techniques of the man Peter Lynch calls in the foreword, "the best investor in history."

"The Craft of Investing" by John Train, $22. This is a sensible and pleasurable read from a proven investment adviser. Other good books: "Straight Talk About Stock Investing" by John Slater, $12.95.

LOCAL LINE: "Washington Savings Bank, Md." is listed under "Top-Yielding 5-Year Certificates of Deposit" in Kiplinger's Personal Finance Magazine, April. The bank is located in Waldorf.

Tomorrow night, Owings Mills-based "Wall Street Week With Louis Rukeyser" is titled "The Luck of the Irish," with guest John H. Shaughnessy, vice president of the Advest Group, and panelists Michael Holland, Maceo Sloan and Mr. Ticker. All panelists will wear green sport jackets. Mary Farrell is guest host.

SILVER LINING? "The market can be merciless on growth stocks when earnings start to slow, as in Mid Atlantic Medical Services, the largest operator of health maintenance organizations in the D.C.-Maryland-Virginia region. The shares fell sharply, but this HMO should get well soon." (Business Week, March 20.)

NEW DEADLINE: "Starting June 1, you'll have to settle brokerage trades for stocks and corporate bonds within three days instead of five, to comply with a new Securities and Exchange Commission rule. So you will no longer be able to rely on putting your check in the mail, or you could miss the deadline." ("Moneyline," CNN.)

BIG MONEY: "The Harvard Business School's Class of 1974 is doing just fine. Most graduates are senior executives or entrepreneurs. Their median income is a quarter of a million dollars, and the typical class member is likely to retire with a net worth of $8 million." (Quotations from a Business Week, March 20, review of "The New Rules" by John Cotter, $25.)

FOOT-DRAGGING: "If you change jobs, there is no legal limit to how long employers may drag their feet when turning your money over to a self-directed IRA. Delay can be costly as well as frustrating. There's a good chance there will be a freeze on investment earnings for part of the time between when you leave your job and when your money is credited to an IRA. If months pass and your money is still in limbo, complain to your former employer -- not the mutual fund where the 401(k) money is invested." (Richard Koski, preretirement consultant.)

"DRIPS" NOT DRAB: "One of the nicer deals around lets moderate-income and start-up investors bypass a broker and buy stock, commission free, directly from a publicly held company. Until recently, however, only 20 firms -- among them Exxon and U S West -- had launched direct-purchase plans. Most firms were held back by SEC red tape.

"But in a recent, largely overlooked ruling, the SEC wiped out most of the red tape. A new book on the subject, 'No-Load Stocks,' by Charles Carlson, editor of the 'DRIP (Dividend Reinvestment Plan) Newsletter,' gives all the details. It's a paperback, published by McGraw Hill, and sells for $14.95." (U.S. News & World Report, March 13.)

LAST LINES: "Cyclical stocks like the autos may look cheap at today's prices, but they looked cheap before the 1974 crash, too." (A. Gary Shilling, economic consultant, in Forbes, March 27) . . . "The flattening yield curve -- the narrowing of the gap between short-term and long-term interest rates -- spells trouble for the economy, the stock market and the fellow in the White House." (Charles Rabin, vice president of Natwest Investment Management). . . "So what if the Dow Jones average broke above 4,000? The best long-term performers among investment letters remain unimpressed." (Mark Hulbert, editor, Hulbert Financial Digest.)

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