Despite higher corporate earnings and a firm bond market, stocks slipped again yesterday. The Dow Jones industrial average fell 21.11 points and closed at 3,598.71. The Dow indicator had tumbled 49 points by midday, but it recovered some of its loss just before the closing bell.
HOPEFULLY HELPFUL: Speaking of stocks, there has been a recent change in the "Dow 5" list of stocks. These stocks make up the strategy whereby $10,000 grew to $661,000 in the last 20 years if an investor rearranged them every year by selling the "Dow 5" alumni and replacing them with the new "Dow 5." (Details in previous and future Tickers, or ask your broker.) The new "Dow 5" are Eastman Kodak, Merck, Minnesota Mining, Sears and Woolworth. . . . Under "Defensive Plays," U.S. News & World Report, April 18, lists cash, short-term bond funds, balanced funds, equity-income stock funds, conservative foreign-stock funds and real-estate funds. . . . "Invest Abroad Without Leaving Home," advises Money magazine, May, adding, These 10 All-American stocks could zoom as much as 63 percent in a year, thanks to exploding foreign markets: Ford, Caterpillar, Mattel, Beckman Instruments, Vishay Intertechnology, American International Group, Duracell International, Foster Wheeler, Boeing and Kellogg."
WORKPLACE WISDOM: "Improving Your Resume" is worthwhile reading in National Business Employment Weekly, April 17-23 issue, on newsstands this week. Excerpts: "Listen to what employers were asking about most often and incorporate more of that information in your resume. . . . Two pages long is the ideal length, in reverse chronological order, and use bullets noting accomplishments in an easy-to-read format. . . . Have three sections: an objective, a summary and key accomplishments. . . . Use strong phrases like, 'Automated the data center with technology. Reduction of 30 staff resulted in $1.2 million annual savings.' . . . Try to tailor your resume for the particular industry where you are applying. . . . Creating a good resume is never easy. Because the writer is personally involved, reviews by both a professional and an industry expert are imperative."
LOCAL LINE: Tomorrow night, "Wall Street Week With Louis Rukeyser" hosts Barry Diller, CEO and Chairman, QVC Inc., with panelists Monte Gordon, Carter Randall and Baltimore investment adviser Eddie Brown. . . . On Friday, April 29, Baltimore Security Analysts present Thomas Usher, President of USX-U.S. Steel Group, Hyatt regency at noon. On the horizon: Cummins Engine, Tuesday, May 3. Members may take guests ($30) if they wish. . . .. T. Rowe Price International Stock Fund is mentioned under "Go For Growth" in Money, May issue. The fund is up 41.7 percent in the past year. Call 800-638-5660 for details. . . . And Price's High Yield Tax-Exempt Fund appears under "Top-Performing Bond Mutual Funds" in Kiplinger's Personal Finance Magazine, May.
WHAT IT MEANS: Several readers have asked me to explain, with examples, what happens to an existing bond when interest rates move higher. Let's say you have bought a $10,000, 10-year government or corporate bond at, say, 6 percent interest, meaning that you get $600 a year interest for the life of the bond. Now let's say, just for an extreme example, that interest rates shoot up to 10 percent, and you want to sell your bond. Obviously, nobody will pay you $10,000 for your 6 percent bond when they can get 10 percent on a new, identical bond. Result? Your bond is worth only $7,530. Now let's say that interest rates drop sharply, to 4 percent. Then your 6 percent bond is obviously worth more, in this case $11,600. In any case, you always get full face value if you hold your bond until maturity.
NOTES & QUOTES: "The top 10 U.S. corporations, ranked by profitability last year, were, in order, Exxon, General Electric, American Telephone & Telegraph, Philip Morris, Ford, General Motors, Chrysler, Sears, Wal-Mart Stores and Intel." (Forbes, April 25). Unhappily, Procter & Gamble, with two Baltimore-area facilities, is listed by Forbes under "Losers," dropping in profitability ranking from 10th in 1992 to 86th in 1993. . . . "John Maynard Keynes said that in the long run, we are all dead. Wrong. With this Federal Reserve, we could all be dead in the short run." (From an editorial by Mortimer Zuckerman in U.S. News & World Report, April 18). . . . John Templeton's heir, Mark Holowesko, selects what he thinks are the world's five best stocks: Georgia-Pacific, Stet Group, Telefonos de Mexico, Arbed Group and DSM Group. The Templeton Growth Fund that Holowesko managed returned 17 percent annually over the past three years vs. an average of 12 percent for similar funds.
ENDPAPERS: "The emergency continues," says "A Slice of Life from Our Daily Bread." The soup kitchen (411 Cathedral St.), now feeding over 800 men, women and children daily, needs muffins, eggs, coffee, lots of sugar, cereal, fruit juice, peanut butter, jelly, tea bags and No. 10 cans of vegetables. There is plenty of easy parking. . . . "Six Stocks To Buy While They're Cheap" are H.& R. Block, Gtech, Tambrands, Tommy Hilfiger, American Brands and Data General." (Smart Money, May). . . . I summarize the week's financial developments as they affect your pocketbook, and frequently answer your money questions on WBAL Radio's Dan Rodricks' show, Saturday mornings around 7:30.