Stock averages in Jan. may bode well for year


Despite Federal Reserve chief Alan Greenspan's warning that the Fed might "nudge" short-term interest rates higher, all stock averages advanced to record highs yesterday. On heavy volume, the Dow Jones industrial average surged 32.93 points, to close at a record 3,978.36, up 224.27 points, or 6 percent, in January.

Speaking of January, since all major indexes scored substantial gains last month, many investors cheerfully pointed to the "January Barometer," an indicator that says, "As January goes, so goes the year."

The barometer has predicted the year correctly in 38 of the last 43 years, an .884 batting average.

YOU SAID IT: Here are more of your postcard comments on our Dow Jones forecasting contest, now closed.

"I'll say Dow Jones 4,182 for 1994 year-end. With stable energy costs, continued retail growth and consumer confidence growing, I believe the Dow will continue to break records." (Fred Murray) . . . "I think '94 is going to be prosperous in the latter half of the year. My prediction of 4,622 is because I'm optimistic; it's also my work address." (Joyce Stahl) . . . "Early advance, middle-year decline, end-of-year-rally. I'll say 3,789." (Jeffrey Jolliffe) . . . "I predict 4,240, halfway between Gail Dudack and Eddie Brown." (Henry Danz) . . . "I say 3,827. My reason: I was born in 1927 and I wish I were 38." (Mary Jane Meisel) . . . "My number is 4,428 because there's so much pessimism out there." (Paul Clein) . . . More of your comments coming Thursday.

MIDWINTER MEMOS: Interested in your Social Security arithmetic? The Kiplinger Washington Letter says that someone who retires at 65 this year and has paid the maximum each year since age 21 will have contributed $46,000 total. His/her benefits of $1,147 a month will return within 41 months. If he/she lives to 81 -- their current life expectancies -- he/she will collect $220,000, not counting future COLAs . . . Dean Witter's Stephen Stauffer (592-3164) will send his firm's new eight-page "Strategem." This issue is devoted to growth potential in Pacific Rim markets. ("Hong Kong's market rose an astonishing 75 percent in the first 11 months of 1993. China is the world's fastest-growing economy.") . . . "Health-care takeovers will be a major story in 1994." (LaLoggia's Special Report) . . . "When you compare tax-free bonds, trusts and funds to taxable yields, you can see why tax-free obligations represent a viable instrument today." (Middle Fixed Income Letter.)

DAD'S BIRTHDAY: My father, Milton F. Westheimer, a Baltimore investment banker who was born 122 years ago yesterday (Jan. 31, 1872), from time to time gave me the following advice, some of it written and left in his safe-deposit box: "Son, if you speculate or 'sell short' in the stock market, you will probably go broke." . . . "When investing, remember that one dollar invested on 'Black Friday,' when stock brokerage offices are empty, is worth 10 dollars any other time." . . . "Don't talk much about what you are doing." . . . "Never hesitate to admit you are wrong.". . . And in the Depression, this advice: "Never buy a ham-and-cheese combination sandwich; buy a ham sandwich and a cheese sandwich because that way you get more bread." . . . "Never buy scratch pads in the five-and-dime store; use the backs of old envelopes from the waste basket." (By habit, I still do that) . . . "Instead of mailing checks for your bills and paying 2 cents postage, deliver them by hand." (That I do not do.)

MONEY-SAVER (1): "Think you're lucky to be paying a low annual credit card fee? Think again. You could easily pay no fee at all. Here's the scoop on some annual fees for some of the largest bank issuers.

No Fee (and never had one): Bank of New York, Discover, First Deposit . . . No Fee Now: Citibank, First USA, USAA FSB . . . Officially a Fee, But Virtually No One Pays: AT&T; Universal, Colonial National, First Chicago, Household Bank . . . If You're New, You're in Luck; If You're Not, Beg: Chase Manhattan, NationsBank . . . Case By Case: Signet Bank." (Smart Money, February)

MONEY-SAVER (2): "With interest rates now at 30-year lows, 15-year mortgages are far from the rarity they once were. You'll save thousands of dollars in interest by choosing a 15-year term instead of a 30-year.

"Get a 30-year mortgage, but make sure you're allowed to make extra payments toward the principal. Then, each month, add something to the principal -- $10, $20, anything you can spare. By doing this, you'll pay off your mortgage many years earlier and you'll save thousands of dollars in interest costs. Start by applying your tax refund to your mortgage." (Dollar Stretching Ideas.)

NOTES & QUOTES: February has historically been a "so-so" Wall Street month, rising an average of 0.1 percent over the last 43 years . . . In its February cover story, Money magazine suggests these top-performing mutual funds: Lindner Dividend, Fidelity Equity-Income, Franklin Income, Berger 101, Kemper Total Return, Twentieth Century Select, Pennsylvania Mutual, Twentieth Century Heritage, Fidelity Magellan, AIM Weingarten, etc. The issue ($3.95) is worth buying . . . "I suggest buying stocks of Bankers Trust, Chemical Bank and Morgan Stanley." (Alison Deans, "Wall $treet Week with Louis Rukeyser" guest, judged to be Wall Street's top bank analyst) . . . "Signs of a Stock Market Top: A major bank offers mutual funds through its automated teller machines; a large brokerage firm runs stock commercials in football games; the best-known bears are turning bullish; Wall Street shovels out new issues faster than money pours into the market; dividend growth is the lowest it has been since the 1973-75 recession." (Michael Sivy, chartered financial analyst) . . . "A new no-fee credit card from Pittsburgh-based Mellon Bank will refund up to 100 percent of the interest paid on revolving balances. Call 1-800 INT-BACK for details." (Business Week, Jan. 31.)

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