Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest,americast.usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Thu, Sep 24 1992 Date: Thu, 24 Sep 92 04:37:35 EDT Message-ID: 09-24 0000 DECISIONLINE: Personal Investing USA TODAY Update Sept. 24, 1992 Source: USA TODAY:Gannett National Information Network ANALYSTS SEEM OPTIMISTIC: Despite an abundance of risks for investors, brokerage analysts are stoutly optimistic. Among 2,800 stocks followed by 54 brokerages, 70% had consensus ratings of "buy" or "strong buy," says First Call, a Boston information service. A buy recommendation means the analyst predicts the stock will outperform the market as a whole. But 70% of stocks cannot outperform the market. (For more, see special Analysts package on below.) INVESTORS SHOULD READ CODES: Everybody on Wall Street knows how to decipher brokerage codes like "buy" or "accumulate," but few individual investors do. Some rules: The direction of change in rating is more telling than the rating; investors get the ratings as old news; analysts are notoriously short-term in judgements; investors should trust their own judgement - analysts work for brokerages which want sells. HOUSE TO VOTE ON CREDIT BILL: The House of Representatives didn't vote Wednesday on a bill to increase consumers' rights when dealing with credit bureaus. The House should vote on the bill in the next few days. The bill would make it easier to get a free copy of a credit report and make sure bureaus correct wrong information within 30 days. INTEREST RATES WON'T DROP MORE: Go ahead and refinance the mortgage. Interest rates have hit bottom. It's a gutsy call, the kind economists shy away from. But weed out the "what-ifs" in many economists' analysis, and people are left with this: Short-term rates now at about 3% have at best another half percentage point to drop - to 2.5%. Long-term rates, on the rise two weeks now, may drop, but not much further. STOCK LETTER MISSES CALL: Michael Murphy, editor of the California Technology Stock Letter, was among those dazed by Tuesday's 62% drop in the value of computer information storage company Exabyte. The stock fell 9 points (it recovered 1:2 Wednesday) - just days after Murphy wrote great things about the "tape backup" industry. Murphy thinks the stock was just too high. "This brings it into line," he says. STURZA'S PREDICTS DROP: Sturza's Medical Investment Letter hit a home run this month, predicting trouble at Gensia, which is developing a drug to protect the heart in surgery. Gensia shares fell 38% Tuesday on poor test results. Wednesday, the stock fell another 3 1:8 to $18 7:8. In the same issue, Sturza's warns that Merck, too, is vulnerable. The newsletter predicted low $40s. Wednesday's close: $46 3:4. GOLD, SILVER DECLINE: Gold prices were down Wednesday. On the New York Commodity Exchange, gold bullion for current delivery settled at $348.60 a troy ounce, down 20 cents from Tuesday. Republic National Bank said gold was unchanged at $348.60 an ounce. On New York's Comex, silver bullion for current delivery fell to $3.799 a troy ounce, down from $3.822 on Tuesday. In London silver slipped to $3.83 from $3.84. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens at 3278.69 Thursday after closing down 2.16 Wednesday. The New York Stock Exchange composite opens at 229.42, down 0.06. The American Stock Exchange market value opens at 379.91, down 1.08. The NASDAQ OTC composite opens at 582.96, down 0.04. DOLLAR OPENS MIXED OVERSEAS: The dollar opens mixed on Thursday. It opens at 0.585 British pounds, down from 0.587; 5.103 French francs, up from 5.100; 1.498 German marks, up from 1.493; and 119.80 Japanese yen, down from 121.45. (As of 3 p.m. Wednesday. Source: First American Bank of New York.) SPECIAL PACKAGE ON ANALYSTS: INTERESTS ARE IN CONFLICT: Brokerage analysts are optimistic about the market. Analysts tend to be smart, studious people. They pore over proxy statements and dissect footnotes in annual reports. They have access to top managers of the biggest companies and ask tough questions. Their reasons for optimism: Conflict of interest. Most analysts work for brokerages, which make money from commissions on trades. BUYS BRING IN BUSINESS: Buy recommendations bring in more business than sell recommendations. Other reasons analysts are disproportionately bullish: Office politics - investment bankers at a brokerage are wooing as clients the same companies the brokerage's analysts are valuing; pressure from companies - executives burned by criticism can refuse to talk to an analyst; and pressure from investors. ANALYSTS CLAIM IMMUNITY: Brokerages acknowledge such pressures but say they resist them. Wall Street does have contrarians who buck the trend of optimism. But they can suffer for their independence, says John Keefe, a former Drexel Burnham analyst who works as an independent securities adviser in New York. On Wall Street, he says, "It's better to fail conventionally than succeed unconventionally." (End of package.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing editor: Martin Baucom. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. 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