On the sixth anniversary of "Black Monday," the Dow Jones industrial average gained 12.58 points yesterday to close at 3,642.31. At the final bell the Dow stood 1,904 points, or 109 percent, above its closing level after the sickening 508-point plunge.
LONDON DIARY: Some notes upon returning from a short London trip: David Meyer, a native Baltimorean now a J. P. Morgan executive, told me, "The recession in England is definitely over. We see recovery signs everywhere." Confirming Mr. Meyer's statement, we found the stores jammed, restaurants packed (if you don't have a dinner reservation, forget it), hotels full and most theaters sold out . . . At dinner, Henry Kaufman, ex-Salomon Bros. interest rate "guru," predicted still lower interest rates, with U.S. 30-year Treasury bond yields probably dipping to 5 1/2 percent. . . Cigarette smoking is so prevalent in London that 90 percent of restaurants do not provide "No Smoking" areas. A native told me, "McDonald's are about the only places you may eat smoke-free."
LONDON MEMORY: An informative lunch with Carl Schoettler, The Sun's London bureau chief, reminded me of another London meal in 1960 when I first met Louis Rukeyser, then The Sun bureau chief and later to become host of the Baltimore-based TV success story, "Wall Street Week." Through the 1960s, Mr. Rukeyser and I remained friends, and when he returned to Baltimore (actually, Owings Mills) in 1970 to launch W$W, he and his first producer, Anne Darlington, asked me to be a regular panelist. A fortuitous London get-together 33 years ago!
Speaking of "Wall Street Week With Louis Rukeyser," Friday night's show will spotlight Elaine Garzarelli, director, Lehman Bros. Sector Analysis. Ms. Garzarelli correctly predicted the 508-point stock market crash of Monday, Oct. 19, 1987, six years ago this week.
LOOKING BACK: Speaking of "Black Monday," most people remember the Dow Jones 508-point collapse, but many people may not realize that stocks recovered in less than two years and now stand over double(!) where the market closed that gloomy Monday night, just above DJ's 1,700. Panicky sellers who regret their hasty actions might be interested in advice my father, a New York Stock Exchange member, once gave me, "Son, never sell good stocks in a bad market."
LOOKING AHEAD: In response to many more requests, and as promised on my recent WBAL Radio program, here is the phone number for HSH Associates, the organization that will provide what it claims are the lowest mortgage rates in the country. Dial 1-800-UPDATES. This is a "for-profit" organization; ask fees when calling . . . Baltimore Bancorp is the subject of a Legg Mason report which the firm will send you if you phone 539-3400. ("On a fundamental basis, we believe the shares of BBB are fairly valued at $12 a share, but given the institution's size, the attractiveness of the Baltimore marketplace and the consolidation trend in the industry, our 12-15 month price target is $15.")
KEEP THE FAITH: The Rothschild Co. client letter says, "Yes, the market is richly valued compared to the 1970s and early 1980s, when we were spoiled by being able to buy great companies at 10 times earnings. Now that these companies are more expensive, some tend to believe that they are overvalued. As long as inflation stays low and economic prospects are satisfactory, however, it is unlikely that investors will have the opportunity to buy at the low valuations of years past. This is not to say that we will not have scary declines between now and the year 2000. The 1960s had some sharp declines (1962 and 1966) that tested the nerves of investors, but those who kept the faith were rewarded by good returns." (Phone 539-4660 for the full letter.)
HOPEFULLY HELPFUL: To help start an investment club -- an activity urged by "Getting Started in Stocks," a cover story in November's Kiplinger's Personal Finance magazine -- write or phone the National Association of Investment Clubs, 1515 E. Eleven Mile Road, Royal Oak, Mich. 48067 ( 543-0612). The NAIC, which charters such clubs, has 215,000 members in 10,000 clubs, where the average investment per member is $44 per month. NAIC says that the average club regularly beats Standard & Poor's 500-stock index.
READING LAMP: Kiplinger's Personal Finance magazine, November, in a cover story, "Investing in The 90s: The New Rules," suggests these new books for beginners: "How to Buy Stocks" by Louis Engel ($5.99), "Kiplinger's Invest Your Way to Wealth" by Theodore Miller ($21.95) and "Making The Most of Your Money" by Jane Bryant Quinn ($27.50) . . . Fortune's "Special Issue: Investor's Guide, 1994" recommends these "Stocks You Can Live With": Sears, Barnett Banks, Philip Morris, National Presto, Plenum Publishing and Warner Lambert. The article also says, "Even the stodgiest income-oriented retiree needs a small stake in stocks. The strategy is safer than you think."
STOCK WATCH: October is the dreaded month that makes many investors uneasy. The market is definitely ripe for a correction, and each time it drops more than a handful of points, investors are programmed to take cover. But with the bond market now back on track, the deathwatch has been canceled." (John Martone Letter) . . . "Neither rain nor sleet nor the earthquake in India nor the Clinton health proposals nor low dividends nor high P/E ratios have been able so far to knock the stock market down. Maybe tomorrow, maybe next week, maybe in 1994 -- but not yet." (Gerald Appel's Systems and Forecasts.)