Stock market defies September storm warnings

THE TICKER

September 07, 1995|By JULIUS WESTHEIMER

Despite dire warnings that September historically has been Wall Street's worst month, investors drove the stock market higher yesterday for the third consecutive day. The Dow Jones industrial average gained 13.73 points, to 4,683.81, now ahead 73.25 points this month.

As one local broker put it, "Investors worried so much about September that they dumped their stocks in August."

GLOOM & DOOM: "We now enter Wall Street's financial 'hurricane season,' as the most devastating storms took place in September and October. Whether we go up or down from here, we're still adding to the longest period in history without a 10 percent or more correction. We could now face a hurricane knocking down stocks 15-20 percent quickly. If the storm is powerful enough, we could have the ugliest autumn since 1987." (Ripples in The Wave Stock Advisory)

MORE CHEERFUL: "Although stocks are extended and dividends at a low for this century, and price-book ratios are near a high for the last 100 years, momentum is not giving a long-term 'sell' signal. Following any near-term correction, stocks will enjoy a second phase of the rise of the proportion of the one since last December, up about 21 percent." (The Master Indicator)

UNHAPPY SUMMARY: Sorry to report this, but of about 30-35 newspaper and magazine articles, news letters, comments, etc., that I read in the past few days, about 75 percent were gloomy on the short- and medium-range outlook for Wall Street.

GOOD NEWS: The Young Investor's ("Kiddie") Fund -- a no-load fund that invests in companies children can relate to -- announces that through Jan. 31, 1996, you can open a new account with only $100 when you establish your account with an automatic investing plan. "With automatic investing," the fund's newsletter states, "you can put aside $50 or more a month toward your child or grandchild's future without lifting a finger -- by automatic transfer from your checking or savings account." (For details and a free introductory kit, call 800-403-KIDS or 800-403-0550 for details.)

HOPEFULLY HELPFUL: "Building a Winning Financial Team" in the new Fortune (Sept. 18) is worth reading. Highlights: "To make the most of what you have, you'll need: (1) A certified planner; (2) An investment adviser who will recommend specific stocks, bonds, mutual funds and other investments; (3) An accountant who will do your Form 1040; (4) A fee-only insurance adviser and (5) A lawyer specializing in estate planning."

SEPTEMBER SONGS: "You can often boost your tax savings by buying your own state's municipal bonds, perhaps through a single-state muni bond fund. But protect yourself from default by sticking to insured bonds or funds." (Mary Sprouse, author, "The Money Magazine 1995 Income Tax Handbook," $13.99)

The latest Kiplinger Washington Letter predicts a raft of new bank mergers, adding that by the year 2000, there will be 2,000 chartered banks, down from 9,000 now.

"With convertible preferreds, you make real money if you think the underlying common stock has greater value than the market reflects." (Richard Howard, manager, T. Rowe Price Capital Appreciation Fund)

LOCAL LINE: Alex. Brown has a new "Strong Buy" report on Staples. ("The firm reported excellent second-quarter earnings, significantly ahead of our forecast.") The report is summarized in this week's (Sept. 4) Barron's.

"Over the last five years, the T. Rowe Price Capital Appreciation Fund (800-638-5660) has managed steady growth with only minor setbacks. Few funds can match such a stability record." (Rational Investment Outlook)

BE CAREFUL: "The bank merger mania continues, but be careful how you approach this trend because many bank takeovers are taking place at little or no premium to the prevailing market price.

"One reason is that the stock market is at a very high valuation level in terms of dividend yields and price-book value ratios, so you are not getting the huge takeover premiums available a couple of years ago.

"As money manager Seth Glickenhaus said recently, 'You don't make money buying a stock when the goodies are on the table and everybody's aware of them.' " (LaLoggia's Special Situation Report, Sept. 1)

CAPSULES: "The party continues but the punch bowl is low." (Adrian Day's Investment Analyst)

"On the concept that all parabolic curves -- like this one -- end in collapse, I'm predicting a Dow Jones collapse." (Joseph Granville)

"The Dow Jones utility yield is now 6.4 percent vs. 2.5 percent on the industrials, so we see where the value is." (Geraldine Weiss, Quality Trends.)

"Is there a proven way for investors to beat the market? Yes, with closed-end funds. Since 1980, closed-end funds beat open-end funds as a class. See your broker for details." (Institute for Economic Research)

Tomorrow night, "Wall Street Week With Louis Rukeyser" originates from the Montreal Stock Exchange.

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