Encouraged by reports of a stronger economy -- but with only moderate inflation -- investors pushed stocks higher yesterday. The Dow Jones industrial average posted a solid 30.95-point advance and closed at 3,746.29.
Although more than 50 percent of all stocks are down this year, the blue-chip Dow indicator now stands almost even with its Jan. 1 level of 3,754.09.
DARK CLOUDS: Speaking of stocks, about 70 percent of recent market forecasts appear pessimistic, so let's get the gloomsters out of the way first: "We've been in 'Phase One' of a bear market since late January. After a yearend rally, we expect much lower prices by next summer. Our downside target is Dow Jones 3,200." (The Professional Tape Reader, Stan Weinstein) . . . "In 1992 and 1993 more money went into stock funds than in the previous 52 years. Since the greatest buying spree in history didn't push stocks much higher, what will happen when people stop buying? Watch out below!" (The Wellington Letter) To cheer up, read on:
SILVER LININGS: "In the year before a presidential election, it's most likely that politicians will begin passing pro-business, pro-consumer legislation to keep voters happy. If lawmakers are worried about a recession, they'll be even keener to make things look good. Plus there's the chance of easier money. If the Fed's worried about recession, it could lower rates. All of that could turn this gloomy stock market around." (Robert Ritter, market strategist, in Forbes, Dec. 19).
FINAL REMINDER: I will give you private financial advice this Saturday, 11 a.m. until 1 p.m., at Our Daily Bread soup kitchen, 411 Cathedral St., directly across from the Enoch Pratt Free Library. There's no charge for the advice. Just bring a big bag of groceries or a check for at least $25 for Our Daily Bread.
DECEMBER DIARY: "Starting Jan. 1, you may deduct only what you paid for publicly traded stocks you give to foundations, not their current market values." (Tax Hotline) . . . A local travel agent warns readers to watch out for rising "phone access" fees in hotels, some up to $1.50 per call. Ask before you phone . . . "Not only are bond yields back to generous levels, but this is a rare opportunity for capital gains while collecting juicy payouts." (Fortune, Dec. 26)
HOPEFULLY HELPFUL: "Benjamin Graham on Value Investing," by Janet Lowe ($22.95) is a fine new book, reviewed in Money magazine's 1995 Forecast issue. Highlights: "(1) Don't pay too much attention to the overall stock market. (2) Buy a stock as if you were buying the whole company. (3) Look for specific signs of value, like earnings doubling since 1985. (4) Diversify with both stocks and bonds. (5) Think for yourself and be patient." Ticker Note: This book would make a practical Christmas gift.
LOCAL LINGO: Robert Hooper of Ferris, Baker Watts' Frederick office sends this advice for brokers: "Always put clients' interests first. To keep developing your professionalism, remember that this is not a 9 to 5 job; homework is critical. Buy the best quality stocks and you won't have to make excuses. Always explain risks of any investment. Meet personally with clients, listen to what they tell you."
BALTIMORE SCENE: "Markets go from being very underpriced to very overpriced; this market is insanely overpriced." (Crisis Investing, 824 E. Baltimore St., Balto., Md. 21202) . . . Procter & Gamble, with two installations in the Baltimore area (Nicholson St. manufacturing plant and Noxell in Hunt Valley) is listed under "Stocks For the Next Millenium" in Fortune's "Investor's Guide" issue. ("Growing ranks of overseas consumers will spur P.& G. product sales.") . . . In the same issue, Legg Mason Total Return Fund and T. Rowe Price Growth & Income Fund appear under "The Best Mutual Funds." . . . Investment Counselors of Maryland says, "It seems that there is something in the environment that stock investors don't like, or don't trust. Hopefully, their fears are misplaced."
LAST LINES: The latest Kiplinger Letter feels that interest rates have not peaked, and that the Fed will soon raise short rates by another half-point . . . In response to several requests, here are toll-free numbers for some well-known discount brokers: Charles Schwab 1-800-435- 4000; Fidelity Brokerage 1-800-544-8666; Olde Discount 1-800-USA-OLDE (800-872-6533); Quick & Reilly 1-800-672-7220 . . . "People who buy U.S. savings bonds now and hold them for five years get a guaranteed 4 percent rate, but the minimum is expected to be abolished next year." (New York Times) . . . "The House Republicans' 'Contract With America' promises to expand IRAs so that all individuals could contribute $2,000 a year after taxes, watch dividends and interest accumulate tax-free, withdraw the funds without penalty to buy a first home, pay for a college education or pay medical bills." (U.S. News & World Report, Dec. 12) . . . Coming Tuesday: A year's end checklist for your money.