Stocks still looking like a buy, and Tokyo may be stirring at last

The Ticker

September 03, 1997|By Julius Westheimer

WHERE DO you put your money now?

Despite market setbacks, don't turn your back on stocks! If the Standard & Poor's 500-stock index continues to move in lock step with the number of men and women reaching age 49 -- as it has since 1920, you'll want to be invested almost 100 percent in equities. A demographic graph, "The Great Boom Ahead," from a book with the same title by Harry S. Dent Jr., shows the S&P in 2010 standing three times its present level.

"Buy Japan Now!" shouts a bold headline in Forbes, Sept. 8, explaining, "Japan is starting to wake up. While the U.S. stock market has soared, Japan's remains down nearly 50 percent. It may be time for a fresh look at Tokyo stocks."

"Invest with long time horizons. People worry about taking risks with their retirement savings. I tell them they can't afford not to take risks because that retirement money must support them into their 80s. Socking money in CDs or T-bills won't outpace inflation." (Ray Martin, financial adviser.)

"Don't turn into a stock jockey. While the average U.S. stock fund grew 14.5 percent annually from 1984 through 1996, the typical fund investor earned just 6.1 percent a year because he or she got in too late, pulled out too soon or both." (Dunbar Financial Services, Boston.)

From 1925 through 1996, stocks advanced, on average, about 10.5 percent annually. Although the Dow Jones average vaulted 26 percent last year and 34 percent in 1995, I suggest you make plans with the long-term average as a guide. If we continue to get exceptional returns, no one will complain, but I expect stocks to gravitate to historical norms.

"With stocks hitting new highs, is it time to get out?" asks a reader. I think not. If you exit now, you are timing the market -- trying to sell just before the stocks peak. Instead, think of market setbacks as buying opportunities. Keep about 10 percent of your assets in a money fund and be ready to buy if prices drop substantially.

Consider buying Baltimore-based Adams Express. The highly rated closed-end fund appears in an optimistic article in Forbes, Sept. 8.

"Nothing hurts performance more than a preoccupation with where the market is headed." (Money, September.)

"Panic selling is a bummer. You're selling a stock at a low price and locking in a loss instead of waiting for a rebound." (401(k) Dimensions.)

"Electric utilities are still a good hedge against an economic or stock market downturn. When buying, be selective. Buy low-cost producers." (Kiplinger's Magazine, September.)

Pub Date: 9/03/97

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