Rattled by higher-than-expected February inflation figures, the Dow Jones industrial average dipped 16.21 points yesterday, closing at 3,426.74.
The Dow now stands 2,463 points, or 255 percent, above its level on St. Patrick's Day 20 years ago when the index closed at 963 near the start of its sickening 45 percent slide from 1,051 (Jan. 11, 1973) to 577, reached Dec. 6, 1974. A 45 percent plunge today would drop the Dow 1,542 points to DJ 1,884! (Decimals omitted)
IN PERSPECTIVE: Did you realize that since the stock market low in August 1982, the S&P; 500-stock index has returned an astonishing 545 percent from price appreciation and dividends? And even if you date the bull market only from the post-1987 crash low, the S&P; 500 is up a still impressive 138 percent on a total return (gain plus income) basis in just over five years.
IT'S YOUR MONEY: "Pension funds kept in weak banks no longer have full FDIC insurance. The funds used to be protected up to $100,000 for each person in the plan and that is still true when the money is in banks meeting federal requirements. But when a bank doesn't meet those requirements the FDIC now insures pension funds for a total of $100,000, regardless of how many people are involved. Self-defense: Get written assurance from your company that pension money remains fully federally insured." (Jane Bryant Quinn) . . . "Security analysts endure conflicts of interest. A brokerage firm may be investing in a firm its analysts are evaluating. In one case a brokerage firm issued a report by an independent analyst that didn't disclose that the analyst had been paid by the firm he analyzed." (Fortune) . . . "Mutual fund five-year performance records definitely correlate with the future." (Mark Hulbert in Forbes, March 15).
WALL STREET WARNINGS: "I'm concerned by deteriorating measures of stock valuation. Recently the Dow Jones and other indexes soared to record highs, but given stocks' record highs the S&P; dividend yield has dropped to 2.7 percent. And -- get this -- the S&P; yield has been below this level only twice, in early 1973 at 2.6 percent, as the worst post-Depression bear market began, and again at 2.6 percent just before the 1987 crash." (Arnold Kaufman, S&P; Outlook) . . . "The market is at its most overvalued level in history. Downside risk could now be over 50 percent." (Peter Eliades Stock Market Cycles)
THE BRIGHTER SIDE: "There's no way anyone can be bearish unless interest rates go up. I predict Dow Jones 4,100 within a year and a half." (Elaine Garzarelli, who "called" the 1987 crash) . . . "With investors still investing untold billions into equity-based mutual funds, sell-offs will be short and comebacks complete." (R.H.M. Survey of Warrants and Low-Priced Stocks) . . . "The stock-bond yield gap continues to be very favorable for stocks." (Downing Technical Analysis) . . . "The broad market has not finished its work on the upside. Any declines should be viewed as buying opportunities." (Market Profile Theorems)..."With the bond market rally driving interest rates to multi-decade lows, potential for a 15 percent correction has been avoided." (Bob Carver's Market Clues)
HOPEFULLY HELPFUL: Suggestion to auto dealerships: Have your service department notify the new car department when owners' cars reach, say, 60,000 miles and have new-car salesmen/women try to sell new models with attractive trade-ins. If the owner says no, try again at 75,000 miles . . . "As part of its recent pitch to soften its tough-guy image, the IRS is making it easy for people who can't pay their tax bills to arrange a monthly payment plan. Taxpayers can now fill out Form 9465, 'Installment Agreement Request,' and attach it to their return; the form is free be calling 1-800-829-3676." (U.S. News & World Report, March 15) . . . The top 10 mutual fund performers in the 10 years Dec. 31, 1982, through Dec. 31, 1992, were, in order: CGM Capital Development, Fidelity Select Health, Fidelity Magellan, Merrill Pacific A, Putnam OTC Emerging Growth, Fidelity Destiny 1, AIM Equity Constellation, New York Venture, AIM Equity Weingarten and Fidelity Contrafund. Gains on all the above exceeded 400 percent for the decade. (Data from S&P; Lipper Mutual Fund Profiles, February issue just received. Published quarterly, $132 a year) . . . "It's not the employer who pays wages -- he only handles the money. It's the product that pays wages." (Henry Ford) . . . "Money is a terrible master but an excellent servant." (P. T. Barnum, 1810-1891) . . . "Business will be better or worse." (Calvin Coolidge).