Buy Stocks

HAVE YOU MISSED the boat in this bull market? Maybe not.Personal Finance says, "With most stocks soaring, you may think you've missed an opportunity to put money to work, but just because high-tech, financial and drug stocks are flying high, not every sector is overvalued."The newsletter adds: "Instead, consider buying homebuilding stocks; many are near their lows and show huge potential. Once interest rates trend lower, homebuilding stocks historically soar. We recommend Lennar Corp., D. R. Horton Inc. and Kaufman & Broad Corp."

ARE YOU ready to buy some individual stocks? Working Woman advises: Buy stocks you know as a consumer. List the products you use (America Online Inc., Gateway Inc., Coca-Cola Co.) and the stores you frequent (The Gap Inc., Home Depot Inc.). Use this as a starting point.Check "under the hood." A good product doesn't always mean a good company, and sometimes a good company doesn't translate into a hot stock. Check into growth rates, future profits and market share.Try to find out what other investors think.

"IT'S TOUGH to argue with the success of buying an Internet stock that gained 966 percent in 1998," says Financial Perspectives. "It's also tough to argue with executing stock trades from the comfort of your own home computer for less than $10."But the publication also suggests that people shouldn't just jump onto the online bandwagon."For online trading, understand the considerable risks; don't risk `serious money'; don't borrow money for online trading; never buy stocks you don't know much about; keep taxes in mind; disregard rumors; use buy and sell `limit' orders," it warns.

SHOULD YOU BUY stocks in a falling market? "When great stocks fall 30 percent or more," says Personal Finance, "it's time to buy."Of beaten down companies such as Coca-Cola Co., Disney Co. and Gillette Co., it says: "Each of those giants is hurt by slowinternational growth and the strong dollar, but short-term problems are nothing in light of long-term positives."Although many people know a bear market is a decline of 20 percent from its recent high, some investors may wonder what causes a sharply "down" market.

HERE are some investment principles that apply to both up and down markets:Listen to experienced professionals, stick to quality, invest for the long pull.Your emotions are your best "reverse indicators." If you want to sell, it's probably time to buy, and vice versa.Don't let every headline or news bulletin kick around your portfolio. Good companies will be around a long time.You make more mistakes by selling than by buying. If you buy a "dog," the most you can lose is your investment. But if stocks you sell double and triple, then split, you suffer financially and emotionally.

What is behind the success of some of the well known investors?"We don't predict the stock market," Warren Buffett says. "You pay a very high price for a cheery consensus. I'd rather buy stocks when no one wants them than when everyone wants them.""There's a strong correlation between stock performance and what companies earn. In the past six years, corporate profits doubled and the market was up 2 1/2 fold." (Peter Lynch, former manager, Fidelity Magellan Fund)According to Forbes magazine, investors should: "Buy, don't sell.

What mix of stocks and bonds should you own?"People with 15 or more years until retirement should have at least as much in bonds as in stocks," says Charles Clough, Merrill Lynch strategist. "The total return -- yield plus gain -- will be better for bonds than for stocks this year and in 1999."Want to buy the favorite stocks of the top-performing mutual fund managers? The list includes General Motors Corp., Charles Schwab Corp., Family Golf Centers and Storage Technology Corp. (Kiplinger's Magazine.

ARE YOU getting fewer dividend increases than last year? "Higher payouts to stockholders showed a year-to-year decline in October, the fourth consecutive drop," says S&P Outlook. "Dividend policies are stingier because heated competition squeezes profit margins. Increases are the fewest since 1995."Here's advice from the 1999 Stock Trader's Almanac, justreceived: "In this game, the market has to keep pitching but you don't have to swing. Keep the bat on your shoulder until you get a fat pitch."

HOW DO YOU make -- and save -- money in a "down" market?John Rothchild, author of "The Bear Book: Survive and Profit in Ferocious Markets," advises:"Re-allocate your assets. No one should be anywhere near 100 percent in stocks, especially in this high market. Cautious investors should keep 50 percent in stocks, 30 percent in bonds and 20 percent in cash."Cut back on aggressive growth stocks with high price-to-earnings ratios and buy stocks that do best in tough times. Examples: consumer goods, electric utilities, household products and foods.

HAVE YOU considered "contrarian" investing?"Most stock portfolios don't outperform the S&P 500 index when investors chase winners," says highly successful adviser David Dreman. Mr. Dreman's High Return Equity Fund is ranked No. 1 among all stock income funds, according to Lipper Analytical Services.He adds, "The problem is that the big profits have already been made on many well-known stocks, as attractive as they seem. Many offer little opportunity for further gain."How does the average investor avoid chasing overpriced high fliers?

American Originals 9 p.m. [CNBC] The documentary looks at the Westminster Kennel Club Dog Show, focusing partly (left) on how the high-priced pups are pampered. And at least for this hour, the network won't be advising you to buy stocks that will end up tanking.

Starting out in investing right now might seem irrational, but many investment experts consider this an opportune time. Financial trauma produces long-term bargains, if you can cope with uncertainty. You'll move gradually into a market that has punished good companies along with the bad, which is the foundation of a value-oriented strategy. "These ... opportunities represent a great time if you are a long-term investor and fundamentally believe in our free-enterprise system," said Mark Brown, a certified financial planner with Brown & Tedstrom in Denver.

Looks can be deceiving, and analysts say that might be the case with midcap stocks now. As a group, medium-size companies look like clear winners in recent months. Since the five-month plunge in the stock market that ended March 10, midcap stocks have climbed about 18 percent. That's almost twice as much as the Standard & Poor's 500 index of large companies, which is up 10 percent in the same period. So an investor might conclude that a trend is in place - the type that happens frequently after the stock market has gone through a rough stretch.

Investors actually relaxed a little last week. After a fearful couple of days in markets throughout the world, investors on Wednesday enjoyed the relief of a turnaround of more than 600 points in the Dow Jones industrial average in a day. Suddenly, with stocks down about 20 percent in markets from France to India, the surprise rebound changed analysts' chatter from fear to buying opportunities. It was a reminder to those ready to flee stocks that it is virtually impossible to guess when the market will be cruel or kind to investors.

BEIJING -- The state-controlled firm PetroChina toppled Exxon Mobil Corp. from its perch yesterday as the world's most highly valued company as eager Chinese investors briefly pushed its value to $1.1 trillion. Analysts said the landmark event underscored China's growth and the hunger of cash-laden savers to invest in China's stock markets despite warnings of a bubble. PetroChina's capitalization rocketed to $1.1 trillion early yesterday when its shares began selling on the Shanghai A-share market, later retreating to a value of about $980 billion.

It's called "playing the bounce," a stock trading strategy that sounds like light entertainment, but isn't. This time of year, traders try to take advantage of the tendency by fund managers to dump some of their ugliest stocks. The fund managers cleanse stock portfolios before the end of the year so unsightly stocks - such as homebuilders and mortgage companies this year - don't show up in year-end reports and scare off investors. Also, by selling losers in October, mutual funds reduce taxes clients must pay, offsetting the capital gains that winning stocks would otherwise leave at tax time.

Lots of people are asking what's happening to the stock market lately. Are we in for a crash or a protracted bear market? No one, of course, can say for sure. But an understanding of some of the key factors that have driven stock prices up the last few years suggests stocks are headed down from here. An interesting graphic in The Wall Street Journal two weeks ago, right before stocks fell so hard, showed that all of the world's top 20 stock markets were at yearly or all-time highs. Everybody was buying stocks.

Many investors won't be boasting about their investment returns this year. Among the major stock market barometers, Standard & Poor's 500 index is up about 4 percent this year, while the Dow Jones industrial average is flat as a tabletop. Not everyone, though, has had such ho-hum returns. Some of the best investment clubs - groups of average investors who pool their money and know-how to buy stocks - regularly outperform the market. The principles that guide them aren't flashy or revolutionary, but basic strategies that have been around for decades because they tend to work.

Wall Street is hoping for a strong finish to a year that is turning out surprisingly well for financial markets. Despite rising interest rates, a plummeting dollar, a sharp jump in energy prices and slowing corporate profit growth, Americans are on track to make good money this year in the bread-and-butter investment categories of stocks and bonds. Things could always go wrong in December. But the calendar is on the side of the bulls: Investors typically have been an optimistic bunch in the last month of the year.

LOW INTEREST rates have pushed retiree Erwin Sekulow of Baltimore County to make a move in recent months that he hadn't planned - buy stocks. Yields on money market funds are negligible, said Sekulow, 66, a retired Johns Hopkins University administrator. And when corporate bonds come due, it's difficult to find another investment that matches the old bonds' yield, he said. Sekulow said he and his wife, Marianne, have turned to stocks - not willingly - and hope the stocks' prices and dividends won't drop.