Yesterday was a record-setting day on Wall Street:
(1) The Dow Jones industrial average closed at another all-time high, gaining 27.47 points to 4,736.29, now up 902 points this year.
(2) For the first time since Jan. 18, 1966, the Dow finished at an "inflation-adjusted" record closing level.
(3) The Nasdaq over-the-counter index closed above 1,000 for the first time, gaining 6.56 points to end the busy session at 1,005.89.
WALL ST. WISDOM: "I always worry when bargains get hard to find because historically that has meant the market is fully valued and will soon drop." (W. J. Maeck in The 1995 Stock Trader's Almanac)
DOW 5 UPDATE: People with $1,000 can now buy shares in the Target Equity Trust, Value 5 Series, which essentially duplicates the "Dow 5" strategy. The fund's literature says, in part, "First, the trust identifies the 10 highest-yielding stocks of the 30 Dow Jones industrials. Then, the five lowest-priced stocks of those 10 are purchased and held for one year."
Since 1975 the Dow 5 strategy outperformed the Dow Jones industrial average by about 3.7 times. See your broker for details.
HOPEFULLY HELPFUL: "About 45 percent of companies sponsor 'flexible spending accounts,' allowing employees to pay health-insurance premiums and other medical expenses with pretax dollars. These plans can save you big bucks in taxes." (Working Woman, July)
LOCAL LINE: T. Rowe Price International Fund, a foreign bond fund, is listed under "Hot Funds With High Income" in Fortune, July 24. The yield is stated at 6.2 percent, three-year annualized total return at 11.92 percent.
HEARD EVERYTHING? When a large, well-known national insurance company recently stopped my monthly annuity payments because the firm "heard" from the IRS that I had died, my secretary asked, "Don'tyou require documentation, like a death certificate, before stopping payments?" The representative answered, "Not always, and if you say your boss is alive, we'll reinstate payments." She said I am, and the company did.
Afterthought: If the IRS says I'm dead, can I stop paying income taxes?
COUCH POTATOES: Summer reading favorites in a recent Business Week listing: The Beardstown Ladies' Common Sense Investment Guide ($19) and The Warren Buffett Way by Robert Hagstrom ($24.95.)
COMPUTER CORNER: Microsoft, Cisco Systems, Oracle Systems, Silicon Graphics and 3Com are described in "The Superhighway's Super Companies" in Personal Finance nTC newsletter, July 12. ("There will be over 4.5 million Internet users by 1996 and 40 million-plus by 2000. The foregoing companies are best prepared to reap profits on-line.")
TAX TIPS: "Conduct a midyear financial review to cut your year-end tax bill. Suggestions: Calculate estimated and withheld taxes, be sure you're paying enough to avoid penalty; balance capital gains andlosses; fund retirement contributions at midyear instead of waiting, getting the most benefit from tax-deferred compounding." (Tax Hotline, July)
WALL ST. WEEK: These comments from panelists with above-average midyear records were made Friday on "Wall Street Week With Louis Rukeyser."
Robert Stovall: "The Dow Jones 30 industrial stocks will earn $335 this year, so multiply that by a 15 P/E, and you have over Dow 5,000 right there."
Gail Dudack: "I'm still bullish; buy some laggards now, like AT&T; and retail stocks."
Ralph Acampora: "I repeat my Wall Street Journal forecast: Dow 7,000 by 1998. Buy Boeing, GM and Bristol Myers."
GUEST COMMENTS: Cappy R. McGarr, W$W guest and hedge fund manager with a five-year average 36 percent annual return, said: "I'm 30 percent in cash now because, with stocks this high, it's hard to find bargains. But I like Lockheed-Martin Marietta, which has a huge cash flow, Playtex and Dial Corp. I don't worry too much about the economy; my specialty is picking good stocks."
TRAVEL TIPS: "These days, airlines increasingly will match fares on competitive routes or make a bargain seat available on the spot to a consumer who insists he or she will fly a cheaper major rival. Can anyone call up an airline and demand a lower fare? No, but a travel agent who knows an airline's vulnerable points often can." (Smart Money,
MAGAZINE RACK: Helpful stories in this week's magazines include: "What's Pumping Up Mutual Funds? Billions of 401(k) Dollars Pouring In." and "Making Your Nest Egg Last As Long As You Do" in Business Week, July 24, and "The Quest For Financial Security: One Black Family's 25-Year Trek To Affluence Points the Way For You" in Black Enterprise silver anniversary issue, August. (Details coming Thursday)
LAST LINES: Procter & Gamble stock, widely held here, appears under "Core Stocks for Long-Term Capital Appreciation" in S&P; Outlook, July 5.
This week's Barron's (July 17) runs a good story, "More Short-Sellers Throw in the Towel." ("The romping Dow Jones average leaves professional bears bloodied; is this the sign of a market top?")
A recent Kiplinger Washington Letter suggests that high-income people consider tax-free municipal bonds at today's high rates, which approach those for taxable 30-year Treasury bonds.
"If current public programs remain unaltered, the lifetime net tax rates for generations born in 1994 and thereafter would climb to 84.4 percent." (Forbes, July 17)
"Eight Stocks That Can Grow On Kids," in Kiplinger's Personal Finance magazine, August, are AT&T;, Compaq Computer, Gannett, Heinz, Mattel, Microsoft, Disney and Wendy's.
The illustrated article describes the companies in detail.