Stock market's big swings come amid less volatility

DO YOU FEEL your stocks' "risk level" is too high? Business Week, July 8, says, "Investors are told to lower their risk and sleep better by moving money out of stocks."

The article adds, "But investors seduced by such advice are in for a rude shock. Sure, big daily swings in Wall Street seem riskier lately, but dig deeper.


"Actually, the S&P; 500-stock index was less volatile in past five years than in the previous five. At the same time, stock performance was greater, so investors got fatter returns with less risk, not more."

SPEAKING OF RISK: In that connection, Forbes, July 15, lists some strong blue-chip stocks selling at price-earnings ratios lower than their historical P/Es. Examples: AT&T;, Bristol-Myers Squibb, IBM, Merck, Mobil, Occidental Petroleum.


POPULARITY CONTEST: These stocks are included under "Most Popular Stocks Among All Newsletters," in latest Hulbert Financial Digest. Number of newsletters recommending stock in parentheses: Accustaff (parent of Baltimore-based Attorneys Per Diem) (8), American Express (8), Cisco Systems (6), Coca Cola (11), Disney (9), General Electric (7), Intel (11), Johnson & Johnson (8), Merck (8), Microsoft (9), Pepsico (6), Philip Morris (6), Schering Plough (7).

And some "Most Popular Stocks In 5-Year Market-Beater Newsletters": Accustaff, Dell Computer, Gateway 2,000, Global Marine, Nike, Tellabs, U.S. Robotics.

KEEP THAT JOB! "How to Protect Yourself From Age Bias" is worthwhile reading in Money, July. Highlights:

"Even if you're only 30 or 40, take steps now to reduce chances you'll ever become age discrimination victim. Don't tie your career to single job or company. Develop skills for different positions where you work or elsewhere."

CLASS ACT: "To keep college money in perspective, I broke down my tuition payments to figure how much I paid per class. It's easy to make that payment, then forget it.

"I divided my tuition by number of weeks, then realized when I walked in the classroom I was handing a $100 bill to the professor. From then on, I never missed a class, did every assignment, got everything I could from every class." (Letter to the Tightwad Gazette, July.)

PLASTIC PLEASURE: "Average U.S. household has four credit cards with outstanding total balances averaging $4,800, up from two cards and $2,340 five years ago. There are 376 million Visas and Mastercards in circulation, up 80 percent from 1991. Lesson: You can no longer assess a person's financial status by observing how he or she lives." (Associated Press story.)

FRANCHISE FACTS: "One of every 12 U.S. business establishments is a franchise. A new franchise opens every eight minutes of each day. With an average of eight to 14 employees, franchises create close to 200,000 jobs per year." (Black Enterprise, July)


TAKE YOUR CHOICE: "Momentum strategies -- buying stocks that have already outperformed the market -- are short-term bets. Value strategies -- investing in distressed, out-of-favor stocks -- have a much longer time horizon." (Mark Hulbert in Forbes, July 15.)

JULY JOURNAL: "The new $100 bill has the first new design in 68 years, but the old 'C-Note' will still be OK, with no time limit to its use. Older notes won't be recalled." (Treasury Department release.)

"While S&P; 500 trades at 18 P/E, Eastern and Central Europe stocks carry only an 8 P/E. Main markets: Hungary, Poland, Czech Republic. Scary, but that's how to make money." (Forbes.)

"Replace a major appliance if repair bill is more than 40-50 percent of cost of a new unit. A range usually lasts 17 years, refrigerator 15, washer 13, dishwasher nine." (Good Housekeeping.)

Pub Date: 7/05/96