Trading light, but Dow gained 5.53

THE TICKER

April 11, 1995|By JULIUS WESTHEIMER

Activity on Wall Street stayed relatively light yesterday as traders awaited two important reports on the economy -- wholesale and consumer prices -- due out today and tomorrow. The Dow Jones industrial average ended the day up 5.53 points to 4,198.15.

DIGGING DEEPER: "A world financial crisis continues, but no one pays attention. In 34 years I've never seen a situation with so many dangers, with the market so complacent. Just as a rising tide lifts all boats, a bear market will soon expose the rotten foundation." (Wellington Letter.)

"Though stocks are at all-time highs, the dividend yield is the second lowest in history. Yields have been under 3 percent for over two years now, longer than for any other period. In the seven occasions when dividends sank under 3 percent, the subsequent bear market scored an average 41 percent decline." (Blue Chip Safety.)

"The stock market outlook remains highly favorable, suggesting

substantial upside potential. S&P earnings will be $36 for 1995, and applying a very conservative multiple of 15 to those earnings produces a target of 540, which translates to Dow Jones 4,400." (Marketimer.)

SOCKING IT AWAY: Despite a few "pie in the sky" assumptions, "How To Turn $25 a Week Into $100,000 or Even More" is well worth reading in Money magazine, April. Highlights:

"Congratulations! You managed to finish the week with a little spare cash. It may not look like much, say $25, but -- you can turn those loose bills into $100,000 or more. If you put $25 a week into stocks that gain 10 percent a year (and that's just under the average annual return for stocks over the past 69 years), you'll have more than $103,000 in 22 years.

"In addition, the longer you stick with such a systematic investing plan, the more dramatic your results will be, thanks to the power of compounding. A 25-year-old investing $25 a week in stocks that return the historical average would build up more than $728,000 (before taxes) by age 65."

MISTAKES TO AVOID: "Common mistakes most mutual fund investors make include (1) Losing out on big profits by trying to time the market. (2) Buying based solely on last year's performance. (3) Failing to take taxes into account. (4) Looking -- only at load -- not total expenses. (5) Failing to ask the right questions, such as 'What are the fund's short-and long-term performances?' 'How risky is it?' 'Who's running it, and what is his/her record?'" (Louis Rukeyser's Mutual Funds.)

Ticker Note: In the supermarket I regularly hear customers ask questions like, "Did this fish come in today?" or "Where are these plums from?" -- involving expenditure of a few dollars. But the same people might plunk down, say, $10,000 for a mutual fund on a salesperson's say-so, without asking any questions.

LOCAL LINGO: PaineWebber's Marvin Fribush will mail you "Municipals -- An Impressive Comeback' if you telephone him at 576-3200. Highlights: "The municipal market has had an impressive comeback thus far in 1995. Longer-term tax-free yields have fallen from above 7 percent in mid-November to current levels just above 6 percent. . . . While we do not feel that the municipal market can continue its recent outperformance of the Treasury market, the overall environment for tax-exempt saving remains favorable."

MORE LOCAL: Among "Sun Stocks," these issues reached 12-month highs in recent trading: Aegon Insurance, Alex. Brown, Avemco, Giant Food, Loyola Capital, Manor Care, PHH Corp. and Signet Bank.

The April "Wish List" of Our Daily Bread soup kitchen, 411 Cathedral St., includes oatmeal, coffee, muffins, cold cereal, milk, tuna fish, bread, #10 cans of vegetables, sugar (lots of it), tea bags, jelly, salt, paper towels, peanut butter and -- high chairs.

UNUSUAL LETTER: A faithful reader, Timothy J. Buzbee, whose letterhead reads, "#170-707, Maryland Penitentiary, 954 Forrest St., Balto., 21202," writes: "I am unable to use a telephone to reach you due to my incarceration, but I wanted to share with your readers something I found extremely helpful. I find most prospectuses extremely difficult to understand, but there's something that helped me immensely.

"It is called 'An Investor's Guide To Reading the Mutual Fund Prospectus,' available from the Investment Company Institute, 1600 M St., NW, Suite 600, Washington, D.C. 20036. . . . It is either free or at a nominal cost."

TAX TIPS: "Want to minimize your chances of going head-to-head with an IRS auditor? A few tips: Pay attention to details, like using the mailing sticker the IRS provides to avoid having a key-punch operator make mistakes typing it in.

"Explain things that seem odd or suspicious. It is rare, for example, that affluent taxpayers have enough medical expenses beyond 7.5 percent of adjusted gross income] to qualify for a deduction.

"Quickies: Beware of the home office deduction. Beware casualty losses. Be careful of charitable contributions, especially those of property. Don't let your enemies know of your tax sins." (Forbes, March 27.)

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