Closing in record-high territory for the 31st time this year, the Dow Jones industrial average soared 35.21 points yesterday, finishing at 3,792.93.
In our Dow Jones forecasting contest, with only four days to go, James Sinsz leads the parade at 3,790, followed by A. B. Fadeley 3,788, Albert Blankman, 3,800, Dr. Ron Checkai 3,777, Ann Cramer 3,777, Bob Lawrence 3,775, Henry Blum 3,811, Dr. Joel Brenner 3,773 and Dennis Benson 3,770.
When these forecasts were made early in January, the Dow hovered around 3,300.
LATE NEWS: The much-publicized (here) "Dow 5" strategy -- the buying of the five lowest-priced of the 10 highest-yielding Dow Jones stocks and rearranging them each year if necessary, whereby $10,000 grew to $568,000 (no misprint) in the past 20 years -- has turned in a fine result for this year alone. For the latest 12 months, beginning Dec. 28, 1992, $25,000 invested in the "Dow 5" grew to $32,754, a 31 percent return. The "Dow 5" stocks today are Du Pont, Merck, Philip Morris, Union Carbide and Woolworth, all out-of-favor high-quality companies.
BANK ON IT: Baltimore Bancorp and Loyola Capital are written up at length in Legg Mason's 39-page December "Mid-Atlantic Bank and Thrift Quarterly" which Gerald Scheinker (486-8010) will mail you. Excerpts: "Baltimore Bancorp stock was inflated this year by takeover speculation. The firm came as close to failing as a bank can come and still survive. The shares are fairly valued at $12; our 12-15 month target is $15." . . . "Loyola Capital is a well-capitalized, conservatively managed corporation that escaped the real estate woes of the late 1980s-early 1990s by sticking to its core business of residential mortgages and consumer lending. Downside is limited and the upside from 14 to 114 percent."
HOLIDAY HASH: "Because institutions close their books and prepare their report cards at yearend, this week will see more 'window dressing,' the procedure whereby mutual funds dump losing stocks because fund managers don't want prospective investors to think they pick losers. So smart investors should consider out-of-favor stocks like Dow Chemical, Digital Equipment and Wells Fargo." (Laszlo Birinyi in Forbes, Dec. 20) . . . "Ninety six percent of medium-size and large companies offer 401(k) plans, but only 75 percent of eligible employees participate. It's hard to imagine a better investment. Your contributions reduce your taxable income dollar for dollar, and your earnings grow taxfree." (Working Woman, December)
WARNINGS: (1) "Standard & Poor's says, 'For the first time ever we have a negative outlook for many electric utility firms. For electric power companies, the smell of competition is in the air. In October we changed our ratings on 47 companies from stable to negative." (Forbes, Jan. 3, on newsstands this week.) (2) "Even the stronger utilities are expected to feel competition, and this puts pressure on local utilities to offer industrial customers lower rates, lest they buy power elsewhere. Least endangered utilities are Florida Progress, Kentucky Utilities, Texas Utilities, Southern Company and Dominion Resources." (Barry Abramson, Prudential Securities, in the New York Times.) Suggestion: Ask your broker to review your utility list, possibly substituting low-cost producers for high-cost firms.
MONEY SAVERS: "Most municipalities give property-tax exemptions to senior citizens, typically $50 or $100 a year. Call your local tax office for information . . . Add up the dollars you spend on lunch in the company cafeteria or nearby deli. Compare that to what it costs to brown bag; try it for a week, or maybe every other day . . . In spite of the stories about $20,000 annual tuition at some schools, there are places that offer a good education for much less: University of Connecticut, University of North Carolina, State University of New York at Albany, Miami University (Ohio), University of Missouri, etc." (Dollar Stretching Ideas.)
MAGAZINE RACK: Three good financial magazines are out with year-end special issues. Business Week (Dec. 27-Jan. 3, $2.75) runs a cover story, "Where To Invest in 1994" ("Just about every day, the stock market climbs to new highs. It's a picture as believable as it is wrong. Never forget that the market follows what Dwight Eisenhower said about war: 'It will astonish you.' The bull market is a long way from over.") U.S. News & World Report (Dec. 27-Jan. 3, $2.95), advises, "Individuals about to take out a mortgage and other borrowers should not bank on another huge drop in long-term rates.") Fortune (Jan. 10, $3.95) recommends these stocks for income, with dividend percentages: American Home Products 4.7, Atlantic Richfield 5.5, Cincinnati Gas & Electric 6.3, First Union Bank 3.9, Mellon Bank 4.3 and PacifiCorp 5.5.
GOOD ADVICE: "Three things to remember always: When you walk, walk like you're going somewhere. To make money, find a need and fill it. And never be afraid to ask -- the worst anybody can say is no." (Tom Hauff's grandfather.)
YEAR-ENDERS: A readable, easy-to-follow guide called "NAFTA, Opportunities For U.S. Industries" is yours for $24 from National Technical Information Service, 5285 Port Royal Road, Springfield, Va., 22161. Ask for stock number PB94-100849LTA. And if you wish to form or join an investment club, call the sales manager of any well-known local brokerage firm and/or write the National Association of Investors Corp. (NAIC), P.O. Box 220, Royal Oak, Mich. 48068 . . . American Barrick and Placer Dome are the only stocks recommended by nine or more newsletters followed by Hulbert Financial Digest.