If your stocks are sinking, think Dow 18,000 and smile

The Ticker

April 04, 1997|By Julius Westheimer

WITH the Dow Jones industrial average off 403 points in the last five sessions, and many investors discouraged by the sharp drop, here is a cheerful, contrarian scenario, a professional, long-term perspective we hope you will find helpful:

In a well-researched book, "The Great Boom Ahead," ($10.95), Harry Dent Jr. writes: "Baby boomers -- entering their 40s and 50s -- are likely to continue the investment boom, bringing the Dow Jones industrial average to 18,000 in about a decade.

"Historically, there is a strong correlation between the Standard & Poor's 500-stock index and people in their peak spending years.

Since 1915, the S&P 500 has almost identically tracked the number of people reaching age 49. As people move to this age group, they begin to save and fuel the stock market.

"The next 'up' phase of this boom will start late this year and accelerate from 2003 to 2009."

Considering that the average age of today's mutual fund manager is only 28 -- their average tenure in the investment field just three years and only one in seven has seen a bear market -- we present the views of experienced veterans who lived through many "up" and "down" markets:

Here is long-range guidance from "Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor," by Janet Lowe: "Most people get interested in stocks when everyone else does. The time to get interested is when no one else does. You can't buy what is popular and do well."

"If a business does well, its stock price eventually follows."

"If you feel you can jump in and out of stocks to beat inflation, I want to be your broker -- but not your partner."

"I never try to make money on the stock market. For all I care, they could close the market and not reopen it for five years."

Opinions from Peter Lynch, highly respected former Fidelity Magellan Fund manager:

"Market declines are great opportunities to buy stocks in companies you like. Corrections push outstanding companies to bargain prices."

"Only sell a stock because the company's fundamentals falter, not because the sky is falling."

"Although it's easy to forget, a share of stock is not a lottery ticket. It's part ownership of a business."

"Invest in companies, not in the stock market. Ignore short-term fluctuations."

"Spend as much time researching a stock as shopping for a refrigerator."

Pub Date: 4/04/97

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