Market quietly digested data on leading indicators



After the government reported yesterday that the February Index of Leading Economic Indicators declined 0.2 percent -- its biggest monthly drop in 1 1/2 years -- stocks digested their recent gains and ended mixed.

Although the Dow Jones industrial average slipped 1.04 points, to close at 4,200.57, the more representative Standard & Poor's 500-stock index inched ahead to a record high.

AND NOW WHERE? "Because the S&P index is up 8.5 percent this year, you can now take that profit and move into the money market, generating another 4.5 percent in the next nine months. That's a completely riskless and worry-free return of 13 percent for 1995, surely tempting." (Walter Deemer's Strategies.)

"The significant out-of-gear actions between the Dow industrials on one hand and the Dow Transports and the New York Unweighted Average on the other are likely to haunt this market in the coming months." (Professional Tape Reader.)

"The market is on the verge of something that will put a serious dent in the continuity of bullish opinion." (Granville Market Letter, one of last year's worst-performing newsletters.)

DOW 5 UPDATED: As of today, the "Dow 5" -- the five lowest-priced of the 30 highest-yielding stocks in the Dow Jones industrial average -- are Chevron, General Electric, Minnesota Mining, Sears and Woolworth. Since 1973, a $10,000 investment in the "Dow 5" returned $617,000, showing a compound annual rate of return of 20.6 percent. No guarantees for the future!

SPEAKING OF STOCKS: I will give a free seminar, "How To Make Your Money Grow," at 10:30 a.m. on Thursday, April 20, at the Baltimore Convention Center, as part of Warfield Business Record's "Mid-Atlantic Business Expo '95." I will cover such topics as how to stay ahead of inflation, how to pick stock winners, how to avoid "potholes," etc. I'll leave time at the end for questions. For required reservations, phone 752-1717.

WHERE WE STAND: Baltimore is listed No. 31 under "1995 Home Guide: The 52 Largest Markets, Population 1 million Plus" in U.S. News & World Report, April 10. Ranked by "Average annual home price growth, 1991-95," Baltimore is listed at plus 2.6 percent. The No. 1 city is Salt Lake City, up 10.6 percent, Los Angeles ranks No. 52 at minus 4.0 percent.

TIME IS SHORT: April 17 is not only income tax deadline, but it's the last chance for people who earn money to make their 1994 IRA contributions. With less than two weeks until IRA deadline, see your banker, broker or mutual fund person promptly.

WHY THE IRA? Speaking of IRAs, Gordon Williamson, a certified public accountant in La Jolla, Calif., says, "Don't underestimate the rewards of an IRA. One reason people don't contribute the maximum annual $2,000 to their IRAs is that they doubt it will add up to a significant part of their retirement savings. They feel other savings accounts are a better place to put tax-deferred money. Wrong!

"Example: Assume you invest $2,000 a year from age 25 to age 35 and then stop making contributions. If your IRA investment earns 12 percent annually -- and that's the Standard & Poor's 500-stock index annual return over the past 50 years -- your money will grow to $1.26 million (!) by the time you turn 65."

LOCAL LINGO: Myron Oppenheimer, Baltimore-based investment vice president, NationsBank, writes: "To increase our 'Consumer Staples' exposure, we added PepsiCo and Upjohn. . . . While we still view the technology sector favorably, the strong relative gains led us to reduce our position." Phone 244-6590 for the full letter.

BALTIMORE BEAT: Baltimore Gas & Electric stock is mentioned favorably in Investment Quality Trends, La Jolla, Calif. Excerpt: "Although the utility average appears to be on the way to retesting its lows, we view the decline as a buying opportunity for select high-grade electrics such as BGE, yielding 6.3 percent, with a dividend payout ratio of 85 percent or less."

Legg Mason's "Investor's Dozen" includes Advanta, American Brands, AT&T, BellSouth, Borg-Warner, Caldor, Emphesys Financial, Kranzco Realty Trust, Norwest, Premark International, Texas Utilities and USF&G. Phone Gerald Scheinker, 486-8010, for the full "Investment Update."

LAST LINES: "The 8.4 percent gain of the Dow Jones industrial average in this year's first three months represented the Dow's biggest advance since 1991. In the last decade the first-quarter advance was outdistanced only by 1986, up 18 percent; 1987 -- the year of the October 508-point crash -- ahead 22 percent; and 1991, up 11 percent.

One year ago this month, 90-day Treasury bills yielded 3.56 percent. Today, about 5.80 percent. Stated another way, your T-bill yield has climbed roughly 63 percent in 12 months. (Data from Business Week, April 10.)

Tomorrow night, "Wall Street Week With Louis Rukeyser" is titled "Unusual Stocks," with guest Warren J. Isabelle, portfolio manager at Pioneer Capital Growth Funds, and panelists Gail Dudack, Louis Holland and Bernadette Murphy.

"Relying upon your employer for a secure retirement is a comfortable but dangerously outdated notion." (Fortune, April 17, in a story, "Getting Past Economic Insecurity.")

Found in my old newspaper collection: Nov. 15, 1972, Chicago Tribune, Page 1, with 2-inch-high, bold-face-type, 8-column headline: "Stocks Close Over 1,000."

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