Market turbulence inspires doubt, confidence, advice

The Ticker

May 29, 1998|By Julius Westheimer

AFTER turbulent days in Wall Street -- the Dow Jones industrial average dropped 150.71 points Tuesday, was down 175.63 points at noon Wednesday before recovering most of the plunge and edged up 33.63 points yesterday -- the Dow this morning stands 13.4 percent above its level on New Year's Day.

With that volatility in mind, here are some warnings, and some cheerful notes, about your investments:

WARNINGS: "Historically, many spring stock market declines worsened in June." ("Stock Trader's Almanac.")

"The market is highly overvalued. The Dow Jones average is trading about 40 percent above its historical average price-earnings ratio of 17.5. Some market sectors are trading at 80 to 85 percent above their historical average P/Es." (Michael O'Higgins, author of "Beating the Dow.")

BRIGHT SIDE: "Goldman Sachs' highly respected chief strategist, Abby Joseph Cohen, thinks the bull market is pausing, not ending. She feels the Dow will meander for a while but will resume its climb later this year to 9,300 and hit new highs in 1999." (Business Week cover story, June 1.)

LONG & SHORT: "Market-neutral funds are 'in' these days. Investors are flocking to funds designed to perform whether the market rises or falls. The system balances 'long' positions with 'shorts,' good for conservative investors -- and should outperform Treasury bills." (Success, June.)

MONTH-END MEMOS: "Europe is very, very strong, but Asia could well be the next source of growth for the U.S. investor." (Mercantile Safe Deposit & Trust Co.)

"It's a good idea for each spouse to keep a credit card in his or her own name. If you add your name to your spouse's account, you become responsible for his or her debts." (Kiplinger's Personal Finance Magazine, June.)

"More Americans have color TVs than phones." (Fortune, June 8.)

"The most expensive words in the investment business are, 'It's different this time.' " (John Templeton, veteran mutual fund manager.)

Pub Date: 5/29/98

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