Surging Dow Jones index eases up for drop of 5.19


After reaching its second consecutive record high on Friday, the Dow Jones industrial average backed off a bit yesterday, giving up 5.19 points and closing at 4,316.08 in what one local broker called a "lazy" session.

Responding to President Clinton's ban on trade with Iran, oil stocks moved higher, with Exxon, Texaco and Chevron showing point-plus gains.

MAY FLOWERS: May in Wall Street is historically a standoff month, inching up an average 0.1 percent over the past 44 years, according to "The 1995 Stock Trader's Almanac." And the almanac's May 1 piece of advice reads: "The worst mistake investors make is taking their profits too soon, and letting their losses run too long."

Speaking of this month, although "The Original Farmer's 1995 Almanac" says, "May is named for Maia, the Roman goddess of growth," I just figured out that if the Dow Jones average grows during May at the same rate as the popular indicator grew in April, the Dow on May 31 will stand around 4,500, an unlikely (but possible) outcome.

WHAT LIES AHEAD? A Barron's poll, printed in this week's issue, lists the most popular stocks for purchase as Motorola, Intel, IBM, Microsoft, Eastman Kodak and Thermo Electron.

The most popular "shorts" (stocks many people feel will decline) are America Online, Starbucks, Coca-Cola, Microsoft (also listed above, for purchase), Micron Technologies and Presstek. The consensus is that the Dow will end this year at 4,290.

BEAR TRACKS: Opinions I read over the weekend were 90 percent bearish. Samples:

"The market is like a frothy cup of cappuccino. It blew upwards with six stocks leading the Dow sharply higher, but when it's over we may end with only a cold cup of American coffee. There's too much bad news out there." (Julie Orser, Investors Commentary)

"Remember when mutual funds and large pension funds all piled into about 50 favorite stocks in the early 1970s, and stocks like IBM, Polaroid, Xerox and Avon went to unrealistically high levels -- and then everyone scrambled for the exits?

"Investors who bought then are still waiting, 22 years later, hoping to get even. Similar conditions are building today. Stay on the sidelines!" (Investment Timing Newsletter)

WINNERS & LOSERS: "The new rules for U.S. savings bonds that take effect May 1 will be better for short-term savers, but long-term savers will take a hit.

"Under the new rules, which apply to bonds bought on or after May 1, series EE bonds held less than five years will earn a valuable rate pegged to 85 percent of an average of six-month T-bill yields.

"Longer-term savers will get a 'blended rate,' surely less than under the old formula." (Kiplinger's Personal Finance magazine, May)

Ticker Advice: See Kiplinger's magazine or your bank for full details of the changes.

SHORT SHOTS: Asked by "Wall Street Week" host Louis Rukeyser last Friday, "What is the most important lesson you have learned over the years?" 98-year-old investment veteran Phillip L. Carret responded, "Patience."

"Avoid risk, which includes avoiding debt. Buy low, or don't buy at all." (Lawrence Tisch, from his new biography, "The King Of Cash," by Christopher Winans, reviewed in Fortune, May 15)

"Seventy three percent of customers buy goods and services for reasons other than price." (Thomas Winninger, marketing consultant, in Success, May)

YOUR MONEY: "Companies offering dividend reinvestment plans include AT&T;, H&R; Block, Bristol-Myers Squibb, Browning-Ferris, Exxon, McDonald's. Motorola, PepsiCo, Procter & Gamble, Regions Financial and Walgreen." (Financial World, May 9, in an article, "New Rules Have Made Dividend Reinvestment Plans More Enticing") See the article or your broker for details.

HOPEFULLY HELPFUL: "At age 6, help your child open his or her own savings account. Many banks let children start accounts with as little as $10 and, if you ask, will waive any penalties for small balances." (Money, April, in a good story, "Start Teaching Your Kids the Basics of Investing")

"If any applicant for a job ever asks me about vacations, I don't give them the job." (Michael Bloomberg, president of Bloomberg Business News, in a CNN interview Saturday.)

"Unless a job applicant specifically says, 'I want this job' -- no matter how great the prospect's qualifications -- I don't hire the person." (A vice president of a large direct-mail company, who requested anonymity.)

LAST LINES: "Cautious investors concerned with capital preservation and steady returns should hop aboard Baltimore-based Adams Express, a closed-end mutual fund. The shares trade at a 14.5 percent discount to net asset value." (Scott Letter Closed-End Fund Report, via Fortune, May 15)

"When you find out about a bank credit card that has a lower interest rate than you're now paying, make sure the rate is the regular rate, not just a special one good for only the first six months or year. If the rate is really lower, switch." (Dollar Stretching Ideas)

Black & Decker appears under "30 Percent-Plus Estimated Earnings Gains, High Stars Rankings" in S&P; Outlook, April 26.

"Building a business isn't as hard as raising a teen-ager." (Ross Perot)

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