With the Dow Jones average this morning at 1,257.45 points, 13.46 percent below its peak -- and Wall Street's disappointment with the Federal Reserve's slim interest-rate cut -- how do you protect yourself against a further stock market decline?
"If you fear a prolonged bear market could make you scale back rosy retirement plans, check into zero-coupon bonds," advises Business Week, Oct. 5. "Like U.S. savings bonds, zeros don't pay current interest. Rather, you buy Treasury zeros at a deep discount from face value and collect the principal -- guaranteed by Uncle Sam -- at maturity."
If the market continues to decline, consider buying high-quality stocks at even lower levels. Under "Dream Stocks to Buy at Depressed Prices," Smart Money, October, lists these issues with "target buy prices": Cisco Systems Inc., $75; Coca-Cola Co., $40; Dell Computer Corp., $50; General Electric Co., $50; Intel Corp., $65; Microsoft Corp., $64, Pfizer Inc., $46; Walt Disney Co., $22, and Wal-Mart Stores Inc., $46.
Here's a revealing note: "Americans spend twice as much time planning major expenses like vacations than researching financial investments," says Fidelity Investments. "A survey of 1,200 investors found families spend an average 137 hours deciding where to travel, 124 hours before buying a car, 84 hours investigating a computer -- but only 60 hours researching mutual funds, stocks and bonds."
Of dozens of recent forecasts, most were bullish. Samples: "Stocks are about to launch another bull market. Considering the average stock is down 50 percent while the Dow is down less than half that figure, it's likely the broad market will outperform the blue chips." (Bob Carver's Market Clues in this week's Barron's)
"If you are currently out of the market, I strongly advise you to move up to a fully invested position in the large-cap end of the spectrum." (The Option Advisor)
"It's always beneficial for us when the market goes down." (Warren Buffett, revealing plans to invest heavily in a bearish stock market)
"Emotionalism is running so high that small volume swings the market violently. And, history declares, this indicates the 'long' side of the market is the place to be right now." (Richard Arms, investment adviser)
Pub Date: 9/30/98