Anticipating an imminent Federal Reserve interest rate reduction, investors pushed stocks higher again yesterday.
The Dow Jones industrial average, which opened this year at 3,834.44, gained another 30.08 points to close at a record 4,615.23.
But, regarding the possible rate cut, local market analyst Rob Brown cautioned, "Beware of the old adage, 'Buy on the rumor, sell on the news.' "
WALL ST. WISDOM: "Become more humble as the market goes your way." (Bernard Baruch.)
HALFWAY MARK: As of June 30, when the Dow Jones industrial average stood at 4,556.10, these readers were closest in our annual forecasting contest: Laurence Godey Jr., at 4,570; Richard Fellin, 4,541; Randi Jonathan Sachs 4,575; Joseph Metz, 4,586.
Considering that the Dow stood at 3,834.44 (721 points below its midyear level) on Jan. 1, around the time these predictions were made, these forecasts appear unusually courageous. Six months to go for dinners and lunches with Mr. and Mrs. Ticker, as our guests at the winners' favorite restaurants!
BALTIMORE BUSINESS: Early this week I asked Joel Finkelstein, board chairman, South Baltimore-based Ace Uniform Services Inc., how uniform "add-ons" and "layoffs" were running. His business has proved a reliable local barometer.
He responded, "Service industries are very strong, such as testing labs, medical labs, etc. Computer businesses are renting lots of uniforms too. The auto industry is so-so, nothing special, but auto services and repairs are very big because people keep their cars longer. Construction off, real estate management steady. In general, a pretty bright picture."
NOTES & QUOTES: "Basketball is the second-largest sport worldwide and growing fast. Cash in by buying Meisenheimer Capital (Nasdaq), which owns 67 percent of the U.S. Basketball League. USBL is to basketball what the vast minor leagues are to baseball." (Smart Money, July.)
"Stocks We Like Selling At $15 or Lower" from S&P; Outlook, June 28, include Aaron Rents ($15), Beverly Enterprises ($12), Health & Retirement Properties ($15), Rollins Trust Leasing ($11) and Sea Container ($15.)
TAX TIP: "Congress wants to cut capital gains taxes by 50 percent, lowering the maximum rate from 28 to 14 percent. But don't postpone selling, because the new law would probably be retroactive to January, 1995, so you'll get the lower rate anyway." (Money)
CAREER CORNER: "Among large and medium-size U.S. companies, 79 percent offer counseling and provide other social services to employees." (William M. Mercer Inc.)
"Executives who are satisfied with their new jobs after one year: 83 percent; after two years: 69 percent." (CNBC News.)
Legg Mason is mentioned in this week's National Business Employment Weekly (July 2-July 8) in an article, "Regional Securities Firms Court Brokers With Success." The story says, in part, "Firms that are expanding and seeking brokers, according to recruiters, include Legg Mason." The story has charts showing how much money brokers make, etc.
HOPEFULLY HELPFUL: "How well you live in retirement depends on how well you run your 401(k) plan. Amounts you and your firm contribute are important, but even more critical are the investments you choose. For people just starting, this example: Age 27, retirement age 67, current income $40,000, contributing 5 percent of income: Have 44 percent in international stocks, 26 percent in small company stocks, 30 percent in bonds.
"Your risk level is high, your expected return 13.2 percent a year and your value at retirement $3.6 million." (Business Week, July 3, from the magazine's excellent cover story, "Managing Retirement Plans: The Smart 401(k)."
FED WATCH: "The Federal Reserve needs to remove its blinders and cut interest rates now, or risk unraveling of economic activity." (Editorial, "Wake Up, Mr. Greenspan," in U.S. News & World Report, July 10.) . . . "If I say something which you understand fully, I probably made a mistake." (Federal Reserve chief Alan Greenspan testifying before Congress, quoted in Business Week, July 3.)
BALTIMORE BEAT: "Mutual fund investors who want to capitalize on the explosion in the New Zealand market should get into the T. Rowe Price International Stock Fund (800-638-5660). Martin Wade, fund manager since 1980, has made his mark by identifying stable markets that provide great growth opportunities." (Dick Davis Digest.)
Recent arrivals in the "Sun Stocks" 12-month new high listings include American National Savings, Comnet, Duratek, Geico, Group 1 Software, Information Resource Engineering and Provident Bank.
"Westinghouse Electric stock, which sold above $39 in 1990, could see a strong move back into the upper teens over the next year." (DRIP Investor) At midweek, Westinghouse stock stood at about $15 a share.)
WALL ST. WATCH: "Will the stock market stumble? Maybe. Tumble? No." (S&P; Outlook, June 28.)
"A lower capital-gains tax rate could well attract fresh dollars into the stock market." (Business Week, July 10.)
"After a 20 percent surge with practically no interruptions, stocks are prone to bouts of profit taking, but there's no significant vulnerability." (Dick Davis Digest.)
"Odds are strong that a short- to intermediate-term top is forming; a correction will unfold in the coming weeks." (The Professional Tape Reader)
"The market is always vulnerable to short-term setbacks in the range of 3 to 7 percent. Any such pullbacks are buying opportunities in an ongoing bull market." (Marketimer.)