Investors look ahead to the year's second six months

The Ticker

July 10, 1996|By Julius Westheimer

AS WE MOVE into the year's second half -- after a 9 percent Dow Jones gain in the first six months -- many people ask, "Where will the stock market go from here?"

From (July 15) Business Week: "As baby boomers swell ranks of the middle aged, they could step up their woefully low savings rate, leading to a possible demographic bonanza boosting stock prices to further records."

And U.S. News & World Report, July 8, runs a worthwhile cover story, "How To Beat The Market." An excerpt:

"Warren Buffett's Berkshire Hathaway returned 36.4 percent annually over 20 years, putting S&P 500's 14 percent to shame. His method: He buys terrific businesses at reasonable prices -- and holds them."

"EXPERT" SCORES: How did the best of our 50 stock market "experts" -- local bankers, brokers, counselors, media stars, etc. -- whose predictions appeared in Ticker on Jan. 10 -- perform in this year's first half?

Closest to the June 30 Dow Jones final figure -- 5,654.63 -- were: Dorrit K. Westheimer (Mrs. Ticker), 5,650 Eddie Brown, financial counselor, 5,660 Charles McCormick Jr., CEO, McCormick & Co., 5,690 Mike Meredith, Merrill Lynch, 5,690 and Mark Dyer, financial adviser, 5,690.

MARYLAND MEMO: Black & Decker is listed under "Rapid Sales-Per-Employee Growth, Low Price-To-Sales Ratios," in S&P Outlook, July 3.

The Outlook rates the company with four stars out of a possible five, and gives B&D a quality rating of B-plus.

WHAT COUNTS: "Money beat happiness by over six to one among Americans asked what best represents the 'American Dream' to them. Top responses: "Financial security, 25 percent; home ownership, 17 percent; having a family, 7 percent; having secure job, 8 percent; happiness, 4 percent; all others (each), less than 3 percent." (Lutheran Brotherhood Report.)

BEFORE YOU BUY: "Before you buy a mutual fund, read its prospectus," advises Your Money magazine, June-July. Highlights:

"Although the typical prospectus makes dull reading, it's not as bad as it used to be. With the prospectus, you now get a two-page brochure that says in plain English what's involved.

"Critical things to look for are investment objective, risks and investment restrictions, fund fees and expenses, financial highlights, performance and fund management."

WHEN TO SELL: "When do you sell a stock? If you bought a stock for growth, hold it as long as company's earnings continue to rise. If profits slow, find out why -- and sell, unless you're sure earnings will increase within a year.

"If you bought a stock for income, keep it as long as the company is financially solid and its earnings per share rise more than 5 percent a year -- and top the dividend by 10 percent. If earnings stagnate, consider selling." ("Dun & Bradstreet Guide To Your Investments, 1996," by Nancy Duncan, $19.)

NOTES & QUOTES: "Beware of lifestyle questions during IRS audits. Auditors focus on how you live -- in an attempt to find out if you have hidden income on which you're not paying taxes." (KPMG Peat Marwick Tax Department.)

"Living trusts don't save taxes compared to a will. Any tax planning that a living trust can provide can be done more simply, cheaper and easier in a will." ("The Complete Book of Trusts," by Martin Shenkman, tax attorney, $22.95.)

"Being prepared for a second or third job is like defensive driving. Be on the lookout for what's ahead, so you can handle tough swerves in the work road." (Money, July.)

Pub Date: 7/10/96

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