Foreign Stocks

MANY PEOPLE think that when they retire they should sell their stocks and go into something safer. But is that the right strategy?Not according to Personal Finance. "Don't abruptly switch from stocks into bonds when you retire," it suggests. "Even though your parents and grandparents switched, life expectancies were much shorter then. You're likely to live 15 years longer than they did, and you'll need growth to keep ahead of inflation. Have a generous helping of common stocks."Sheldon Jacobs, editor of No-Load Fund Investor, says: "Asia is again a hot investment opportunity.

EARLY-JUNE Journal:START YOUNG! "Since money at 8 percent doubles every 9 years, a child who, at 18, saves $2,000 a year in an IRA at 8 percent will, at 65, have more than double the savings of someone who waits till 28 -- $1,059,000 vs. only $476,000. Thus, an early start brings $583,000 in extra wealth resulting from just a $20,000 investment."A child who saves $2,000 annually in an IRA from 18 till 26 -- and then stops -- will have more at 65 than one who starts at 28 and puts in $2,000 every year until 65 -- by $66,000 -- or $542,000 vs. $476,000.

IF YOU LISTEN to everybody, you'll have results like everybody," runs an old Wall Street saying.And pity people who listened to curbstone gloomsters when September -- historically the stock market's worst month -- began. Examples:* "With dividend yields down to 2.5 percent -- a record low -- stocks continue dangerously overvalued." (Investment Quality Trends)* "Insiders are taking profits. Investors should, too." (Vickers Weekly Insider)* "The stock market is dangerously overbought and vulnerable to profit-taking.

WASHINGTON -- As investors increasingly send their dollars overseas, the Securities and Exchange Commission is stepping up efforts to curb abuses such as insider trading and make it safer for Americans to buy foreign stocks and bonds.Huge profits can often be made abroad, but experts say the Wild West-like atmosphere of some emerging markets heightens the risk of price manipulation, insider buying and selling, and other .. scams that can burn even experienced players.In the past few years, both money managers and individual savers have poured billions into foreign stocks and bonds, with a sizable chunk of that cash going into distant and volatile exchanges, from Bangkok to Buenos Aires.

FORGET Chechnya, Bosnia, Haiti. The Mexican financial crisis represents the first real test of America's ability to respond to the challenges that are most likely to dominate the future global agenda. Judging by the unprecedented steps President Clinton was forced to take recently to circumvent mounting public opposition to his efforts to help Mexico, we are failing.The issues raised by the peso's sudden collapse defy the old ways of thinking about foreign policy. Indeed, they call into question the very idea that foreign affairs can be distinguished from domestic concerns.

Declining for the third consecutive day, the Dow Jones industrial average gave up 26.24 points yesterday and closed at 3,837.13. The Dow has fallen 93.53 points this week, as investors continued to worry about inflation, higher interest rates and the effect of the October employment report due out tomorrow.Speaking of stocks, here, as promised, are the 15 worst Dow Jones performers over the past decade. (On Tuesday we listed the 15 best, led by Disney, Coca-Cola, Merck and Philip Morris, in that order.

NEW YORK -- Foreign stocks threw a party last year and everybody came. All together, international mutual funds rose 39 percent in 1993, according to Lipper Analytical Services. By region, Japan funds gained an average of 20 percent, European funds 26 percent, Pacific funds (not counting Japan) a stupendous 63 percent and Latin American funds a superstupendous 65 percent. That compares with 12 percent for general U.S. equity funds.American money poured into these markets in huge amounts. In both October and November, 28 percent of net new stock-fund investment went abroad, according to the Investment Company Institute.

Dragged down by a sagging dollar and lower bond prices, stocks snapped a five-day winning streak yesterday. The Dow Jones industrial average, which climbed 84.18 points last week, slipped 6.15 points and closed at 3,702.99. Around lunchtime, the Dow had been down 28 points.SPEAKING OF STOCKS: "Question good news about any stock. Some good news, such as changes of CEOs or basic corporate strategies, have dramatic long-term impact. Other kinds of good news, such as surprisingly high quarterly earnings, have little or no long-term impact."

Q: I have been following the market for three decades -- through the doldrums, the glory years and the current floppy scenario.My question is: Last year, I purchased Motorola stock as a long-term investment. This year, on Tuesday, April 12, the stock dropped $12. A newspaper article stated that $7.75 of the decline occurred in "after-hours trading" on Monday. What in the world is "after-hours trading"?A: After-hours trading is a catchall phrase encompassing many different ways to sell stocks after 4 p.m. Eastern time, when the major exchanges close.

Investors who overlook the stocks of overseas companies may be missing two-thirds of their opportunities.U.S. issues represent little more than one-third of the world's total market in stock issues, says Charles Brandes, president of Brandes Investment Management Inc.Mr. Brandes, who manages a $650 million portfolio, has put about two-thirds of that in foreign stocks. His main clients are large pension funds, but he says international opportunities are available to individual investors as well.

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.

Does it look like my good fortune with my H.J. Heinz Co. shares will continue? - F.C., via the Internet Frozen potatoes and soy sauce have never looked so good. The global producer and marketer of packaged foods, led by strong gains of those two popular products, turned in a 12 percent increase in net income in its fiscal first quarter, ended July 30. Sales rose at least 20 percent in every foreign region, producing double-digit earnings that compensated for a slump in sales to U.S. restaurants.

Retirement savers have been plowing money into foreign stocks, but experts say many are failing to consider taxes and how the investments fit within their overall plan. Foreign stock mutual funds accounted for $722 billion in workplace retirement accounts, including 401(k) plans, and in individual retirement accounts last year, says the Investment Company Institute, a mutual fund trade group, a more than 80 percent increase in just two years. As investors pile on, however, many fail to realize their foreign dividends are subject to tax, even though their money is sitting in tax-deferred retirement accounts.

Assets owned by the Maryland State Retirement and Pension System gained 1.56 percent in value for the six months that ended Dec. 31, a report shows. That's not a bad result during a tumultuous period. Credit bonds and international stocks. The fund that finances retirement income for teachers, police and other public employees is more diversified than it used to be. Standard & Poor's index of 500 big U.S. stocks delivered a negative return of 2.7 percent for the period. Seven years ago, U.S. stocks made up 48 percent of the portfolio.

Albert H. Gordon took over Kidder, Peabody & Co. in 1931, turned it into an underwriting leader on Wall Street, and saw opportunities overseas before many rivals. He's still looking abroad at the age of 105. After eight decades as an executive and investor from the roaring 1920s to the age of terrorism, Gordon says he's "bearish" on U.S. stocks, partly because of the $8.41 trillion national debt. He prefers shares of foreign companies such as Canada's EnCana Corp., Wal-Mart de Mexico SA de CV and Petroleo Brasileiro SA. "At least three-quarters of whatever I own is foreign stocks," he says from his Manhattan apartment overlooking the East River.

Q. I'm a fairly aggressive investor and own a few media stocks, including Time Warner Inc. What is the outlook for the company? - R.A., via the Internet A. There's always plenty going on at this media and entertainment giant, though not all of it has benefited shareholders. While Million Dollar Baby hasn't been the box-office smash that Lord of the Rings: The Return of the King was a year ago, the boxing film directed by Clint Eastwood did take home four major awards on Oscar night. The Aviator, another of the company's films, also was a big winner.

If David Herro is right, this is a great time to buy foreign stocks and currencies. "From a fundamental perspective, the dollar is overvalued vs. most currencies," says Herro, co-manager of Oakmark International. Herro cites purchasing power parities that indicate the dollar is "20 percent to 25 percent overvalued." Herro says he can't predict when the dollar will turn, but he says the move could be a sharp one. "It's like a bunch of kindling just waiting for a match." In extreme cases, Herro will hedge his exposure to foreign currency but now he feels "very good about buying foreign currencies."

BOB MARKMAN is rocking the boat himself and trying to convince the rest of the world that there is a storm at sea. The Minneapolis-based fund manager has stirred up a lot of emotions by taking on established thinking on fund investing. In his new book, "Hazardous to Your Wealth: Extraordinary Popular Delusions and the Madness of Mutual Fund Experts," and in an article in the current Worth magazine (which you can see at www.worth.com), the manager of the Markman Multi-Funds rips conventional wisdom and the way most people invest.

MANY PEOPLE think that when they retire they should sell their stocks and go into something safer. But is that the right strategy?Not according to Personal Finance. "Don't abruptly switch from stocks into bonds when you retire," it suggests. "Even though your parents and grandparents switched, life expectancies were much shorter then. You're likely to live 15 years longer than they did, and you'll need growth to keep ahead of inflation. Have a generous helping of common stocks."Sheldon Jacobs, editor of No-Load Fund Investor, says: "Asia is again a hot investment opportunity.

EARLY-JUNE Journal:START YOUNG! "Since money at 8 percent doubles every 9 years, a child who, at 18, saves $2,000 a year in an IRA at 8 percent will, at 65, have more than double the savings of someone who waits till 28 -- $1,059,000 vs. only $476,000. Thus, an early start brings $583,000 in extra wealth resulting from just a $20,000 investment."A child who saves $2,000 annually in an IRA from 18 till 26 -- and then stops -- will have more at 65 than one who starts at 28 and puts in $2,000 every year until 65 -- by $66,000 -- or $542,000 vs. $476,000.