Stocks do go down, of course, and some are better than others

The Ticker

June 24, 1998|By JULIUS WESTHEIMER

Here are some suggestions for improving your portfolio:

Maybe you shouldn't hang onto your stocks forever. "Like gardens, portfolios must be weeded," says Michael Burke's Outlook, June. "Companies that grow and prosper for many years see their industries mature and product demand shrink. Steel stocks made highs in the 1950s. Many auto stocks disappeared. Foreign competition damaged businesses like Zenith Corp.

"McDonald's Co., Home Depot Inc. and Wal-Mart Stores Inc. were not even around when U.S. Steel Corp. and Zenith Corp. were blue chips. Many years ago there were popular New York restaurants called Automat, Childs and Schraffts. Now they're gone, replaced by Burger King Corp., Cracker Barrel Corp., Taco Bell Inc. and Wendy's International Inc.

"The investors in the old restaurants lost most of their money. Investors in the newer concepts made, and still make, lots of money as these businesses flourish. Weed out that portfolio."

Long-term possibilities

The Midyear 1998 S&P Outlook suggests these "Core Stocks for Long-Term Capital Appreciation": Abbott Laboratories, Coca-Cola Co., Federal Home Loan Bank, General Electric Co., Intel Corp., International Business Machines Corp., Procter & Gamble Co. and Safeway Inc.

Ted Benna, president of the 401(k) Association, an employee benefits consulting firm, gives this "Bull and Bear Market Strategy for Your Retirement Plan":

"Adjust your asset allocations. The greatest impact on your retirement plan performance is how you divide your money among stocks and bonds -- not what particular funds you chose.

The balancing act

"The tremendous Wall Street boom over the past few years means your allocations probably are now lopsided compared with what you originally intended.

"For example, if you started 10 years ago with 70 percent stocks and 30 percent bonds, the stocks may have grown to 90 percent of your list, while bonds may represent only 10 percent. One way to balance your holdings is to direct all new plan contributions to bond funds."

Says Mark Spangler of MFS Associates: "Because many mutual funds pay capital gains to shareholders toward year-end, selling now -- if you're going to sell -- helps avoid some capital gains taxes later."

"In a bull market, an 'overbought' condition typically lasts longer, while an 'oversold' condition ends quickly. The reverse is true in bear markets." ("Stock Trader's Almanac")

Pub Date: 6/24/98

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