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Dow lets up but broader indexes surge to record highs

THE BALTIMORE SUN

Yesterday was "Consolidation Day" for the Dow Jones industrial average, as one local broker put it, after last week's four-session 146-point run-up. The blue-chip indicator slid just 0.34, closing at 4,702.39. But the Dow transportation index, S&P; composite and Nasdaq indexes broke through to record highs.

WALL ST. WISDOM: "Longer life spans and inflation mean that the old 'coupon-clipping' bond approach to retirement investing no longer holds. To make your hard-earned savings last long after your last paycheck stopped, cut back on bonds and load up on stocks." (Fortune, July 24, in a cover story, "Will You Be Able to Retire?")

BIG DIFFERENCE! "Dividend yield on stocks is only 2.6 percent, a historic low. Also, that's where dividends were before the 1987 crash. And stocks are at three times book value.

"But none of this matters long-term. If you had invested $1,000 in 1963 and re-invested dividends, by 1994 you would have had $23,000, but during that time if you had been out of the market just 90 of the best days (1.2 percent of the time), your $1,000 would be worth only $1,100!" (Alexandra Armstrong.)

HOPEFULLY HELPFUL: "For your 401(k), begin young, salt away the maximum, pick stocks and take some risk. You'll need that money because Social Security 30 years out is questionable, and employers are backing away from offering defined-benefit pension plans. That means your 401(k), etc., must generate most of your retirement money." (Business Week, July 3.)

MARYLAND MEMOS: Mid Atlantic Medical Services and T. Rowe Price are listed under "Best 1995 Mid-Cap Stocks" in Financial World, July 18.

Legg Mason's July "Investor's Dozen" includes Borg Warner, Capital One Financial, Finova Group, Griffon, May Department Stores, Quorum Health Group, Ross Stores, Sierra Pacific Resources, A.O. Smith, Standard Federal Bancorp, Texas Utilities and USF&G.;

TOP RATES: Loyola Federal Savings appears under "Top-Yielding One-Year Certificates of Deposit" and Loyola, Bank of Maryland and Chevy Chase Federal Savings are listed under "Top 5-year CDs" in Kiplinger's Personal Finance Magazine, August.

MONEY SAVER: "Low introductory credit card rates are expiring and converting to double-digit rates -- but competition is keen and rates can be negotiated. Strategy: One month before your rate expires, ask your issuer for a new low rate. If the firm refuses, shop for a new card." (Bankcard Holders of America.)

BE CAREFUL: "Safe-deposit box contents may or not be insured by the bank -- and then only if you can prove to the insurance carrier what was in the box. Homeowners' insurance usually insures up to 10 percent of your personal property coverage 'off-premise' but only those items covered by your policy. Suggestion: A homeowners' policy rider specifically for items in the box." ("The Bank Book" by Edward Mrkvicka Jr.)

CAREER CORNER: "If you're feeling the pinch of corporate downsizing and no sign of a promotion, don't despair. There's another way to advance your career -- move sideways. With a lateral 'cross-functional' move you can take on new responsibilities, learn new skills and make new contacts." (Black Enterprise, July)

STAY SHARP: "Forget about golf; you'll be played out in six months. Think instead of working -- at least part-time. A retirement career can be fun, stimulating and as good for your health as for your finances. How to start? Seek out a small company and learn to use a computer." (Fortune, July 24, in a story, "Retire Today: Find a New Job Tomorrow.")

DOLLARS & CENTS: "Poor spending habits waste 25 percent of most people's discretionary income. To do better, begin saving at least $1 a day plus all pocket change. When buying, pay cash to remind yourself that you're really spending money. Ask for discounts on major purchases." (National Center for Financial Education.)

JULY JOURNAL: This month is historically an "up" month in Wall Street, with the S&P; composite index climbing an average 1.2 percent over the last 44 years.

"One college expense you can postpone until fall: a computer. The best deals come by waiting to buy at the campus bookstore. Manufacturers sell computers and software to on-campus stores at discounts, which the stores pass on to students." (Kiplinger's Personal Finance Magazine, Aug.)

WALL ST. WATCH: About 75 percent of weekend comment was pessimistic. Samples of both sides:

"If the stock market were baseball, I would say that the game is in the seventh or eighth inning. It's too late to buy a ticket for what's left of the game." (Laszlo Birinyi, financial counselor.)

"The bulls are still very much in charge, but the dimensions of the current rally continue to leave me more cautious than enthusiastic." (Tim Bost, Financial Cycles.)

"Don't bet that interest rates will stay down. The stock market is still a better bet than long bonds." (David Dreman, investment manager, in Forbes, July 17, under "Short Memories.")

"Chances of a stock market correction remain high. Mutual fund cash positions are extremely low, indicating that it's unlikely that institutional money will drive up stock prices." (IBC's Moneyletter.)

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