Stocks staged a late rally yesterday with the Dow Jones industrial average gaining 10.62 points to close at a record high of 3,555.40. The Dow is now 253 points, or 7.7 percent, above its Jan. 1, 1993, level.
Just for comparison, on New Year's Day, 1991, the Dow stood at 2,633.66 and by Jan. 1, 1992, the popular indicator had reached 3,168.83. But before cheering, read on:
WALL STREET WARNING: "If the stock market's rarefied atmosphere gives you the chills, these figures won't warm you up. Standard & Poor's 500-stock index fell 19 percent or more eight times since 1958 and five of those descents began with stocks yielding less than 3.1 percent. In late June the S&P; 500 yielded 2.8 percent. Other key valuation measures -- price-earnings and book value ratios -- also flashed warning signals." (Kiplinger's Personal Finance Magazine, August)
READING LAMP: As promised, here are more quotations from that excellent easy-to-read, easy-to-understand new book on money, "The Wealthy Barber" by David Chilton ($18.95): "It's the person who doesn't save 10 percent who has to worry about inflation, not the person who does." . . . "The painless way to save is to pay yourself first. Whether you're saving for a down payment, a car, a trip, whatever, the most effective thing is to have the money come right off your paycheck before you have a chance to spend it." . . . "A major reason people lose money with their brokers is that they constantly go against the wisdom of 'let your profits run and cut your losses.' " . . . "Turning your back on an excellent mutual fund just because there's a load [commission] makes little sense."
WORKPLACE WISDOM: Want to safeguard your job? Here, from "Skills for Success" by Adele Scheele, are excerpts: "First, some warning signs that your job may be in jeopardy: You or your
department has been losing accounts; your supervisors have stopped including you in meetings; an outsider is called in -- grim-faced and unsociable -- as your firm has turned over the 'dirty work' of firing to an outside consultant. Next, to keep your job: Strengthen your relationship with your boss and your boss' boss; make suggestions how to increase business; improve yourself by taking courses and learning foreign languages, etc."
JULY JOURNAL: The New Yorker magazine, July 26 issue on newsstands this week ($1.95), runs one of its rare business articles, "Taking the Dare," subtitled, "As First Boston's top managers walk out in search of sweeter deals, Wall Street is watching to see if the company can make it by playing by new rules" . . . Tomorrow night, "Wall Street Week With Louis Rukeyser" examines "The Low-Risk Investor," with guest Warren Spitz, managing director, Prudential Investment Advisors and panelists John Dessauer, Maceo Sloan and Martin Zweig . . . The Kiplinger Washington Letter says that half the new proposed taxes will hit high-income people, couples with incomes over $140,000 and singles over $115,000. The rate, probably retroactive to July 1, will jump to 36 percent and to 39.6 percent for incomes over $250,000 . . . Small firms hurt by unfair imports can seek help by calling Trade Remedy Assistance Office, 500 E St., SW, Washington, D.C. 20436.
HOPEFULLY HELPFUL: "Buying last year's best mutual funds can be a good strategy for next year. Mutual funds with strong one-year track records generally do better the following year than funds with strong five-year or 10-year records. Reason: Fund investment strategies rarely change, but stock market trends do. Over a shorter period, a successful strategy tends to keep working. Given more time, the strategy will have some better years and some worse ones." (Lipper Analytical Services) . . . "A key market indicator, still, is the number of stocks making new highs at market tops -- or new lows at market bottoms. If the number of new highs is dropping, the odds of owning a stock that has made or will make a new high are also declining -- a bearish signal. If the number of new lows is dropping, the odds of buying a stock that hits a new low also drop -- a bullish situation." ("The Nature of Risk: Stock Market Survival" by Justin Mamis, $12.95.)
LOOKING AHEAD: "Recently, many commodity markets have moved sharply higher. This current move is different from previous ones as there is broader upside participation across many unrelated markets. Stock, bond and other markets now act as if they are responding to inflowing demand, not just a sporadic rally." (Morry On the Market) . . . "Sell gold short between the $400-$420 level because inflation statistics to be released over the next several quarters will be anemic at best." (Investment Timing Consultants) . . . "Most of our Model Portfolio stocks have been holding right near their peaks. This kind of internal market strength reflects serious stock accumulation." (Cabot Market Letter) . . . "We continue to believe that individuals are not paid enough additional yield to invest beyond 15 years or to accept a quality rating of less than double-A by either Moody's or Standard & Poor." (Lynch Municipal Bond Advisory)