January's market often forecasts rest of year

The Ticker

January 05, 1996|By JULIUS WESTHEIMER

NOW THAT last year's record-breaking stock market is history, many investors (and noninvestors) ask, "Can Wall Street do it again?" Possible answer:

"Nothing beats the January Barometer, 'As January Goes, So Goes the Year,' " says the 1996 Stock Trader's Almanac, adding, "Since 1950 no other indicator predicted the market's course as accurately.

"Based on whether the S&P 500-stock index is up or down in January, most years have followed suit 45 out of 50 times -- an 89 percent (!) batting average.

"The January Barometer outperforms all other barometers in predicting the next 11 months."

IT ADDS UP: "You have an extra $100 a month, so what should you do with it?" asks a Wall Street Journal article. The story suggests:

"Pay off credit card balances... Put some in the bank... Put every dollar you can in your employer's retirement plan... Make an IRA contribution... Invest in a stock mutual fund... Buy a short-term bond fund... Pay down mortgage or other loans... Give money to your children."

MORE SUGGESTIONS: Regarding the above, Black Enterprise, January, adds these hints:

"Refinance home and cars to lower interest rate... Increase amount of pre-tax 401(k) contributions... Invest more aggressively in stocks... Increase face value of life insurance... Raise disability benefits to 80 percent of income... Use Intuit's 'Pocket Quicken' software to track monthly expenses."

MARYLAND MEMOS: Tonight, Abby Joseph Cohen, co-chair, Investment Policy Committee, Goldman Sachs, visits "Wall Street Week with Louis Rukeyser" on "What's New for 1996?" Panelists will be Eddie Brown, Mary Farrell and Mr. Ticker.

Rockville-based Mid-Atlantic Medical Services is listed under "Rising Sales and Earnings" in S&P Outlook, Dec. 27.

BALTIMORE BANKS: "Money continues to pour into mutual funds, with significant portion of 401(k) plans going to stock investment." (Mercantile Safe Deposit & Trust Co.)

"Although a near-term correction is not unexpected, positive trends will support long-term stock prices. Most important is continuing accommodative Federal Reserve policy." (First National Bank)

MONEY-SAVER: "To lower your credit card interest rate, tell your service rep you're about to make a big purchase and that you'd put it on your card if the rate was lower. It's much easier to get a reduced rate on new purchases than on existing balances." (Robert McKinley, pres., RAM Research Group, Frederick)

WHAT IT MEANS: "Announced layoffs due to corporate downsizing since 1989 reached 3 million by Dec. 31, 1995, says Challenger, Gray & Christmas, out-placement firm." (New York Times, Dec. 29)

In that regard, I figured 3 million discharged employees would fill 60 (not six, but 60) Oriole Park at Camden Yards stadiums. If laid end to end, 60 Oriole Park stadiums would extend from downtown past Towson. Unreal.

JANUARY JOURNAL: "Met Life found that salesmen who tested high for optimism sold 37 percent more insurance than $l pessimistic men." (Fortune, Jan. 15)

A local nutritionist told me, "You don't gain weight between Thanksgiving and New Year's. You gain weight between New Year's and Thanksgiving."

The Kiplinger Washington Letter (Dec. 29) says the Fed will cut short-term interest rates at the end of January.

LAST LINES: Coming Wednesday: Opening of our 1996 Dow Jones contest, with rules, prizes and predictions by 50 local "experts" -- bankers, brokers, media stars, etc.

"Cut cost of bank checks $15 or more by ordering from an independent firm, such as Current Inc., Colorado Springs, Colo., and Checks in the Mail, New Brunfels, Texas." (Tightwad Gazette)

"1995 was the fifth best year on record for the stock market, topped only by 1933, 1954, 1935 and 1958, in that order." (U.S. News & World Report, Jan. 8)

"The $10 to $20 ready-made reading glasses sold in drugstores and supermarkets are usually just fine. From an optician, they could cost $250." (Money, Jan.)

"Washington isn't about to kill the estate tax, so good planning may still require a trust." (Financial World, Jan. 2)

"If you're due a tax refund of $600 or more, decrease your withholding at work." (Working Woman, Jan.)

"God gives every bird its food, but He does not throw it into the nest." (Bits & Pieces, Jan. 4.)

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.