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 Tue, Sep 15 1992 Date: Tue, 15 Sep 92 04:23:48 EDT Message-ID: 09-15 0000 DECISIONLINE: Personal Investing USA TODAY Update Sept. 15, 1992 Source: USA TODAY:Gannett National Information Network INTERNATIONAL FUNDS FALL SHORT: Once again, Wall Street has sold an investment with a great sales pitch but a mediocre return: Short-term international-income mutual funds. Here's the pitch: The funds give investors high yields from abroad by investing in high-yielding, short-term foreign securities. A three-month U.S. Treasury bill yields 3% while a three-month German government bill yields 9.7% Monday. (For more, see special International package below.) BROKERAGES FLASH BUY SIGNALS: U.S. stocks look a whole lot better suddenly - all because Germany chopped key interest rates. At least three U.S. brokerages flashed buy signals Monday as stock markets rallied around the globe. Dean Witter, County NatWest and Donaldson Lufkin Jenrette advised clients to raise their exposure to U.S. stocks. Analysts think Germany's decision could boost stocks for years. GERMAN RATE CUTS SPUR MARKET: The stock market responded Monday to Germany's decision to cut rates with optimism. Falling rates should spur economic activity in Europe, and that promises to spur stock gains among U.S. companies, led by those that export to Europe. Stocks of exporters such as Caterpillar were among Monday's biggest winners as the Dow Jones industrial average soared more than 70 points. TREASURY RATES, YIELDS FALL: The Dow Jones industrial average shot up 70.52 points Monday to 3376.22, spurred by news of key cuts in German interest rates. The NASDAQ composite index jumped 11.20 points to 594.21. The yield on 30-year Treasury bonds fell to 7.25% from 7.29%. The discount rate on three-month Treasury bills fell to 2.89% from 2.92%. The dollar climbed to 1.4820 marks from 1.4505 marks. AMEX SELLS BOSTON CO.: American Express took another back-to-basics step Monday, announcing the sale of Boston Co. by subsidiary Shearson Lehman Bros. Mellon Bank of Pittsburgh will pay $1.5 billion in cash and securities for Boston, an investment-management company that counts among its major customers mutual funds and pension funds. Mellon should get a boost in the investment management business. MELLON EXPANDS: Mellon Bank's Monday purchase of Boston Co. from American Express subsidiary Shearson Lehman Bros. highlights Mellon's recognition of expansion in fee-based areas. AmEx got more for Boston that had been expected. Financial services industry analysts had expected the company to fetch around $1 billion - a third less than the sale price. AmEx and Mellon shares rose slightly. INSURERS STILL HURT: The damage totals from Hurricane Andrew and now Hurricane Iniki will bring the 1992 total in insured losses to $12.1 billion. Usually, such staggering payouts would boost the stocks of insurers as investors speculate that higher premiums and better profits will follow. But not this time. Big insurance stocks have slumped and investors will see no recovery, and perhaps further losses. DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens at 3376.22 Tuesday after closing up 70.52 Monday. The New York Stock Exchange composite opens at 233.73, up 2.93. The American Stock Exchange market value opens at 390.05, up 3.60. The NASDAQ OTC composite opens at 594.21, up 11.20. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Tuesday. It opens at 0.529 British pounds, up from 0.508; 5.038 French francs, up from 4.893; 1.487 German marks, up from 1.4893; and 124.4 Japanese yen, up from 123.9. (As of 3 p.m. Monday. Source: First American Bank of New York.) SPECIAL PACKAGE ON INTERNATIONAL: FUNDS' ASSETS GROW: Short-term international funds' assets have grown 39% to $22.5 billion the year ended in June, according to Lipper Analytical Services. And Wall Street is pushing them. But most short-term international-income funds haven't lived up to their promise of high yields with low risk. Although the average fund delivered 7.7% in interest, the funds' average after share-price decline was 5.6%. RETURN IS NOT SO HOT: The return for the 10 largest international-income funds was 4.9%. That's not so hot, considering the average money fund paid 4% with no risk and the average return for short-term U.S. government-bond funds was 9.9%. The funds' performance is particularly poor because the U.S. dollar fell in value 16% against an index of major foreign currencies the 12 months that ended in August. YIELDS MAY DROP FURTHER: Normally, a falling dollar boosts an international fund's return because its holdings can then be converted into more dollars.But poor hedging, unforeseen events and high costs have hurt the funds. If European rates continue to fall, yields on the funds will drop, too, making the funds less attractive. Analysts say investors have proved they don't understand the risks of international investing. (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. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM