On the first day of spring 1996, some see sun, some see clouds

The Ticker

March 20, 1996|By Julius Westheimer

On the first day of spring, bright and foggy forecasts about your money:

SUNNY DAYS: "While stocks may back off a few more percent, a full-fledged correction 10 percent plus still isn't likely even if bonds continue to falter." (Personal Finance, in this week's Barrons)

LONDON FOG: "Recently, U.S. stocks rose or fell by TC percentage point in one day. Such persistent volatility is rare and in the past preceded traumas like The Crash of 1987. Wall Street's rise no longer looks irresistible." (The Economist, March 9-15)

SPRING FLOWERS: "Adults spend 16 times as many hours selecting clothes (145 hours a year) as on planning for retirement (9.1 hours)." (USA Today)

"Reminder: Every worker can put up to $2,000 into an IRA each year, one-income couples a total of $2,250. Deadline for 1995 contribution: April 15." ("Your Money," CNN)

LOCAL LINE: University of Maryland appears under "Top 25 Graduate Business Schools" in U.S. News & World Report's March 18 cover story. The College Park business school ranks 24th in the country.

MATH CLASS: "When will your money double? Divide your rate of return or interest rate into 72. At 6 percent, $100 becomes $200 in 12 years, at 8 percent in nine years, at 18 percent in only four years. It's called 'The Rule of 72.' " (Moneypaper, March)

Speaking of math, if you lose 50 percent in a stock, you need a 100 percent gain to break even. Example: Buy a stock at $50 a share and it drops 50 percent to $25. You need 100 percent gain from $25 to $50 to get even.

LONG PULL ONLY: Be careful of spectacular one-year mutual fund results, warns Morningstar Inc., in last Sunday's New York Times. Examples:

Last year the Bruce Fund, a growth fund, shot up 64.8 percent, nearly double the S&P 500 gain, but returned only 13.1 percent a year over five years. Alliance Quasar climbed 46.5 percent in 1995, only 16.1 percent annually over five years.

ON THE HOUSE: "Prepaying an 8 or 9 percent mortgage equals earning a no-risk 8 or 9 percent on your money. But paying down your mortgage leaves less money, so establish a home equity line of credit first. This gives you access to your home's equity if need arises." (Ernest & Young)

MARYLAND & MORE: "Spice wars have not ended and McCormick is upping its already-heavy ad budgets again. We're lowering our earnings estimates, but preserving our 'Buy' rating." (Raymond James)

"Asked what 'big-ticket' items they hope to buy this year, 30 percent said a used car almost twice the number who craved a new one." (Smart Money, April)

Kiplinger Washington Letter says many employers, to control benefit costs, turn over health insurance, 401(k)s and other plans to single third-party administrator who copes with insurance bureaucracies, etc.

SURPRISE ENDING: "In your estate, divide assets evenly among children, even if one displeases you or if one becomes wealthy. Even split helps family unity. If uneven, explain why in your will.

"And it's becoming common practice to videotape a 'last message' to be played after your death, explaining your wishes about distribution of your assets." (New Choices for Retirement Living, March)

THE CRYSTAL BALL: More quotes from our Dow Jones contest in which readers sent more than 2,000 cards, a record:

"Lower interest rates and increased stock buying by U.S. and foreigners will push Dow to 6,233 by year-end." (Ronald Hausman)

"I predict 6,035. Republican president and Congress will boost an unusually strong December but then I picked Pittsburgh in the Super Bowl." (Jeff Vinson)

"Interest rates down, it's a presidential year and there'll be a serious attempt to reduce the deficit. I say 6,190." (Harvey Kasoff, recent runner-up)

"5,763. A 15 percent rise in Dow earnings with only one percentage point rise in long rates, causing little change in P/E ratios." (Donald Stevens)

"I say 6,000. I made good money in 1995; if I win please contribute dinner cost to your favorite charity." (Mohammed Siddiqui)

"The fat will finally hit the fan. I say 3,972." (Louise Smith)

"7,576 an impossible dream?" (Helen Thompson)

Pub Date: 3/20/96

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