The Federal Reserve announced its seventh interest rate rise in a year yesterday afternoon and the Dow Jones industrial average, retreating from a 23-point advance, quickly sank into minus territory. It later struggled to a 3.70-point gain and closed at 3,847.56.
Bonds weakened and many large banks raised their prime lending rates one half of one percentage point to 9 percent.
WHAT YOU WROTE: Speaking of stocks, here are more of your postcard comments in our 1995 Dow Jones forecasting contest: "I say the Dow Jones average will close 1995 at 3,213. Higher interest rates will drop the Dow." (Ron Coleman) . . . "I predict 4,024. I'm an economics major at Franklin & Marshall College." (Sinclair Eddy) . . . "I was a year premature in 1994, so I'm going with last year's prediction of 4,189. Hope to see you at dinner!" (Bill Nies) . . . "Problems of Orange County, Calif., and the Mexican peso will depress stocks throughout the year, so I say 3,750." (Jack McDonough) . . . "Market will be lower because House and Senate are now under Republican control. I say 3,796." (Edward "Hawk" O'Brien)
WHAT THEY PICKED: Want to know what the 1994 top-performing stock-picking panelists on "Wall Street Week With Louis Rukeyser" selected for their best selections of 1995? Eddie Brown, Baltimore adviser whose WSW stock selections were up 8 percent last year: Brinker International, Cisco Systems, Green Tree Financial, Glendale Federal Bank, Health Care & Retirement, Microsoft, Oracle Systems, Prime Retail, United Healthcare, U.S. Treasuries 7 1/2 percent due November 2024.
Harvey Eisen, whose stocks climbed 14.4 percent in 1994: Bell Sports, Beverly Enterprises, General Motors Class E, IVAX, MDL Information Systems, Phoenix Technologies, Quidel, Sallie Mae, Tele-Communications A, Time Warner, WorldCorp. (More next week.) . . . "The 'Dogs of The Dow' strategy involves buying stocks of the 10 Dow Jones companies with the highest year-end dividends. This strategy has regularly been a winner; in 1994 the 'dogs' beat 90 percent of the U.S. stock mutual funds." (Barron's)
"Regarding stocks, people always ask me where is the outlook good, but that's the wrong question. The right question is, 'Where is the outlook most miserable?' To get a bargain, look for where the public is most frightened and pessimistic." (John Templeton) . . . "Better to ask twice than lose your way once." (Danish proverb)
BALTIMORE BEAT: Dean Witter's Stephen Stauffer will mail his firm's latest "Strategem" if you phone him at 592-3164. ("The stock market produced a positive total return in every year preceding a presidential election since 1943. Average annual return: 21 percent!") . . . Among "Sun Stocks," Manor Care and Procter & Gamble climbed to new 12-month highs in recent trading; Bethlehem Steel sank to a yearly low. . . . Tomorrow night, Baltimore adviser Howard (Pete) Colhoun joins Alison Deans and Michael Holland as panelists on "Wall Street Week" with guest Robert Rodriguez, in a show entitled "A Fine Stock and Bond Manager."
WARNING (1): "Investment scams are more common now due to the recent poor performances of the stock and bond markets. And scams will become even more common if market performance continues to be poor. Basic tricks: Cold calls selling investments; promoters' claims of having 'inside information'; pronouncement of great 'supply/demand opportunities' in real estate, commodities or metals such as gold, silver or platinum." (Michael Stolper, San Diego investment adviser)
WARNING (2): "Don't keep cash, negotiable bonds or securities in your safe-deposit box. Theft is on the rise as robbers distract guards, make wax impressions of master keys and return with copies to loot boxes. Because it's impossible to prove that currency was in your box, your loss may not be covered by the bank. Keep cash in a fireproof home safe and savings bonds and securities at home -- but keep copies at the bank for proof of ownership." (Edward Mrkvica, author, "The Bank Book," $12.) Ticker Note: This advice might be overkill, but in times like these I still think it's worth sharing.
LAST LINES: Dean Witter's Jack Rosenbloom will mail his firm's four "Planned Equity Portfolio" lists -- growth, emerging growth, total return and high yield -- if you phone him at 547-7027 . . . On Thursday, Feb. 9, Baltimore Security Analysts present Robert Kunisch, chairman, PHH Corp. at the Hyatt Hotel, at noon. On the horizon: Feb. 15, Occidental Petroleum; Feb. 22, Comcast; March 9, Louis Lowenstein on "The Good & Bad News About Financial Analysts" and March 23, Equity and Fixed Income Derivatives. . . . "In 1923, when $2.5 million was real money instead of a year's salary for a .237-hitting infielder with stone hands, that's what it took to build Yankee Stadium in the Bronx." (New York Times) . . . "The stock market smells a slowdown in earnings, but an awful lot of that has been discounted already." (Charles Clough, Merrill Lynch strategist)