Market, indexes are slumping but Dow still above Jan. 1 mark RTC

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ALTHOUGH THE stock market slumped yesterday for the third consecutive day, the Dow Jones industrial average -- standing this morning at 5,346.55 -- still is 229 points, or 4.4 percent, above its New Year's Day level. However, the blue-chip index has fallen 431 points, or 7.4 percent, from its all-time high.

Because technology stocks were battered again yesterday, the high-tech-laden Nasdaq index slipped slightly below its Jan. 1 level.

GOOD ADVICE: Speaking of stocks, Business Week's July 29th lead editorial is entitled, "Ride Out This Roller Coaster," explaining, "Baby boomers are finally thinking long-term, pouring enormous sums into mutual funds.

"Although studies suggest most investors have a one-year time horizon, that's not enough. They must stick out Wall Street's inevitable declines."

LOOKING BACK: The newsletter Frugal Living Guide: Increase Your Money IQ reminds us that over the past 50 years stocks yielded an average 11.9 percent annual return compared with 5 percent on long government bonds and 4.7 percent for Treasury bills.

LOOKING AHEAD: Baltimore-based advisor Stanford Rothschild writes, "While near-term volatility might continue, we hold to our conviction that a diversified portfolio -- with significant stock representation -- will produce superior long-term returns.

"Further, these conditions often create buying opportunities."

PAY YOURSELF! "After you pay off the items you've been buying on time -- car, house, etc. -- write a check to yourself every month for the same amount. Invest the money in a retirement account. You've lived without that money for years and shouldn't miss it." (Alexandra Armstrong, financial planner)

SWITCHING GEARS: Turning from Wall Street to Main Street, consider this "security" check:

Approaching the security area at Dulles International Airport before an overseas flight, I asked, "Would you please hand-search me? I've been told to avoid metal detectors with my cardiac pacemaker."

The official replied, "No, just walk through like everyone else." After I did, "beeping" loudly from coins, nail clippers, keys, pill box, etc., he added -- without searching me -- "You're OK, just board the plane."

PARIS DIARY: The weak U.S. dollar produced these prices overseas: Sidewalk-cafe breakfast for two about $35, lunch closer to $55, dinner stratospheric. Hotel room prices are out of sight. A Coke costs $4 at McDonald's. Why don't U.S. restaurants include the 15 percent tip, as they do in France, relieving diners from fumbling with money and calculating the amount?

SIMPLE LIFE: "Want more time to enjoy life? Your finances are a good place to start," says Kiplinger's Magazine's August cover story. Some highlights:

"Ditch specialty credit cards; having only two cards simplifies bills, checks you write, deadlines to meet. Forget frequent-buyer clubs; few dollars you save aren't worth the hassle. Stick to one checking account and pay bills automatically from it, including phone, utility, mortgage. When buying mutual funds, stick to one family. Buy an index fund that mimics the stock market."

MORE BEFORE 40: Additional "Do These Things Before You Are 40" suggestions:

"Develop your own style. Experiment in your 20s, but after 40 you don't want office people asking, 'Who is that?' Put your emotional life in order. If you're going to get divorced, or end an affair, do it before 40. Don't let those problems drag down your career later.

"Successfully network. If you haven't established a network of people obligated to you by 40, you're in trouble. Learn to keep your mouth shut. Don't gossip or talk about your plans. More careers are ruined by careless talk than by anything else."

JULY JOURNAL: "Find bonds with high coupons -- then you don't worry as much about where interest rates are going." (Fortune, Aug. 5, in "A Clever Strategy for Bonds")

"Retirees: Those new inflation-indexed Treasury bonds look pretty good for you. Ask your banker or broker for details." (Money, July)

"Planning your estate is not a one-time thing. Revisit the plan every three years or upon a major lifestyle change." (Smart Money, August)

Baltimore-based Waverly Inc. stock is listed under "Companies With Yields Below Their 5-Year Average" in Forbes, July 29.

"A verbal contract isn't worth the paper it's written on." (Samuel Goldwyn)

Pub Date: 7/24/96

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