Look to bonds as haven, but be careful

The Ticker

May 22, 1998|By JULIUS WESTHEIMER

WHERE do you put money now?

BUY BONDS: "In this ridiculously high stock market, bonds stand out as real values. 'Real' interest rates are highest in the world, inflation is quiet, the government runs a surplus and utility indices are approaching new peaks -- all of which signals better times ahead for bonds." (Barton Biggs, Morgan Stanley strategist.)

BUYER BEWARE! "When interest rates plunge, as they have for a year, many bonds can be 'called' by their issuer -- that is, paid off before maturity date. This is bad news for bondholders, because, since rates are falling, you'll have to invest at a lower yield." (Worth.)

NO WALLFLOWERS: "The most popular stocks among nationwide investment club members are, in order, Intel Corp., Microsoft Corp. and General Electric Co." (National Association of Investment Clubs survey.)

BULL RUN: "There's room for more growth in stocks as long as earnings are OK and interest rates and inflation behave well. There will be a short-term hit if the Fed raises rates later this year, but stocks will continue to rise by money flowing into mutual funds." (Kiplinger Washington Letter.)

JOIN THE CLUB: "Investment club members' attitudes and investing ideas change over time. In the beginning, investments tend to be conservative, but as the club's portfolio grows, members should be more willing to consider higher-risk stocks and funds." (Black Enterprise.)

HOME FRONT: "If you plan to stay in your house for less than three years, you may be better off with an adjustable-rate mortgage. Many lenders offer low teaser rates on ARMs, applicable for the first 12 months of the loan." (Deloitte & Touche Review.)

WANT A JOB? "In this 1998 real estate boom, home sales are strong, prices are up and jobs are abundant." (U.S. News & World Report, May 25.)

Pub Date: 5/22/98

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