Stocks extend rally Dow rises 13.13


Stocks continued to rally yesterday, with the Dow Jones industrial average gaining 13.13 points, to close at 3,697.08. At midday the Dow index had inched past its previous closing high (3,710.77) but was unable to hold that 27-point gain.

With four weeks to go, here are the leaders, through last night's closing figure, in our annual Dow Jones forecasting contest. The two closest crystal-ball-gazers at year-end will be guests of Mr. and Mrs. Ticker for dinners and lunches for two at their favorite restaurants; 10 runners-up get hardback books about investments. When this year began -- and these predictions made -- the Dow stood at 3,301.11.

The leaders: Paul Fishkind, 3,697; Colleen Kahler, 3,697; Jon Zemlak, 3,694; Sofia Fudge, 3,702; Marie Gruber, 3,705; Bud Frank, 3,685; Stuart Sachs, 3,684; Frank Weidner, 3,683; Frank Francese, 3,715; John MacDonald, 3,678; Mary Smith, 3,675; and Leonard Schuler 3,675.

HOPEFULLY HELPFUL: "For a good mutual fund checkup, call your mutual fund annually to make sure the portfolio manager hasn't retired or quit. If the manager has left, ask for the new manager's record at the last fund he/she ran. If you don't get a satisfactory answer, sell! There are plenty of other good funds from which to choose." ("Funding Your Future: The Only Guide To Mutual Funds You'll Ever Need" by Jonathan Clements, $10.99) . . . "Capital gains continue to be taxed at a maximum rate of 28 percent under the new rules. So if your income puts you in a higher bracket than 28 percent, look for investments producing capital gains rather than dividends or interest income, both of which will be taxed at the higher rate." (Consumer Reports, November)

DOW 5 UPDATE: Responding to many requests, here is an update of the "Dow 5" stocks -- the five lowest-priced issues of the 10 highest-yielders of the Dow Jones 30 industrials. As of today, the stocks are American Express, Du Pont, Merck, Union Carbide and Woolworth. Beginning with $10,000 in 1973, an investor who followed this strategy of buying the "Dow 5" and rearranging them annually would now have $568,580 (a compound rate of 20.6 percent a year) vs. $89,640 in the 30 Dow industrials.

LOCAL HONORS: Stephen Geppi, Diamond Comic Distributors, Timonium, is written up under "The Entrepreneur of The Year Register" in the cover story of Inc. magazine, December issue. The article begins, "Mr. Geppi has been a comic book fanatic since he was a 9-year-old sorting comics in the back room of a neighborhood liquor store in Little Italy." The business, founded in 1982, employs 700 people, with projected 1993 revenues of $220 million.

DECEMBER DIARY: On Tuesday, Dec. 7, Baltimore Security Analysts will sponsor Ben Kovolsky, president, Cosmetic Centers, at the Hyatt Regency Downtown at noon. If interested, why not ask your broker to take you? ($30) . . . "If you're 35 years old today, making $60,000 a year and want to maintain that level of income in retirement at age 65, any retirement plan you have now probably won't cover it. At 3 percent inflation, it will cost you $150,000 per year to maintain your way of life in the year 2023. If you get 5 percent interest, you'll need a nest egg of $3 million." (Success, December)

BE CAREFUL: Business Week, Dec. 6 issue on newsstands this week, runs a thoughtful cover story, "The Yield Game: Risks and Rewards of Hunting for Higher Returns." The magazine's classifications are: Negligible Risk: Tax-free and taxable money market funds, six-month and one-year CDs, three-month and six-month Treasury bills. Low Risk: Short-term municipal bond funds, adjustable rate mortgage funds, prerefunded municipal bonds, five-year Treasury bonds and short-term corporate bond funds. Moderate Risk: 10-year investment-grade tax-free bonds, corporate bond funds, 10-year Treasury notes and Dow Jones utility stocks. High Risk: International bond funds, 30-year Treasury bonds, high-yield bond funds and high-yield bonds. Unacceptable Risk: High-coupon mortgage-backed securities, low-grade real estate trusts and low-grade junk bonds. The issue is worth the $2.75.

LOOKING BACK: Over the past year, here is how a $10,000 investment fared in various categories: In foreign stocks, $14,158; in U.S. Treasury bonds, $12,394; in U.S. stocks, $11,365; in gold, $11,228; in a money market fund, $10,217 . . . "At this time of year, attention has historically focused on the 'January Effect,' one of the single-largest inefficiencies in the otherwise very efficient stock market. It is the tendency of all stocks -- especially small-capitalization company issues -- to perform well in the last few days of the year and early trading days of the new year." (Hulbert Financial Digest.)

LOOKING AHEAD: "Investors are nervous; that's a good sign for the stock market." (R. S. Salomon, CEO, Salomon Bros. Asset Management) . . . "Our position for months has been that the greatest damage and pain will come in 1994. This is not 1987, and broad transitions take time. Short-term steps back from the edge are integral to the process, which is so vast as to imply a potential downward move even greater than we've allowed for. If you're hoping for an intermediate correction down to Dow Jones 3,100-2,900, pray that the lower 3,700s mark the top. A Dow 4,000 could bring a crash and financial devastation." (The Inger Letter) . . . "A consolidation phase will become more visible in the next three to eight weeks and will last for only two months. However, now is the opportunity to prepare your portfolio for a mid-December blastoff. Use the current period to do some pruning, then 'load your wagon.' " (Don Hays, Wheat First Securities)

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