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, Oct 1 1992 Date: Thu, 1 Oct 92 04:57:26 EDT Message-ID: 10-01 0000 DECISIONLINE: Personal Investing USA TODAY Update Oct. 1, 1992 Source: USA TODAY:Gannett National Information Network OCTOBER HAUNTS THE MARKET: Investors thinking about buying stocks may want to wait a month. Chances are they'll get them cheaper. Thursday is the first day of a month that conjures ugly memories. The worst crash in history came Oct. 19, 1987, when the Dow Jones industrial average plummeted 508 points, or 23%. And, of course, kicking off the 1930s Depression was a 12% Dow drop on Oct. 29, 1929. (For more, see special October package below.) STOCK OPTIONS ARE PUSHED: Five securities exchanges Wednesday unleashed Wall Street's newest campaign to get more business from individual investors. This one extolls benefits of buying stock options. A stock option gives a holder the right to buy or sell stock at a preset price within a certain time. Options are relatively cheap, and they are risky. They allow investors to make big bets with little money. CYCLICALS TOOK A BEATING: Economically sensitive companies - especially makers of autos, metals and machine tools - were among the worst performing stock groups in the third quarter. Reason: A much-anticipated economic recovery has yet to arrive. Expectations of improved earnings are going unfulfilled, and cyclical stocks - those whose earnings closely follow changes in the economic cycle - have floundered. ANALYSTS ADVISE AFTER RESULTS: Analysts have favorite stock groups to push after reading third quarter results. Samuel Stewart Jr. of Wasatch Advisors says go into beaten-down economically sensitive stocks. But Arnold Kaufman of Standard & Poor's recommends investors wait for recovery before getting into cyclicals. Instead, he likes food companies. And he thinks the aging of baby boomer should make drug stocks strong. INVESTORS AWAIT JOB REPORT: Blue chip stocks barely budged Wednesday as investors continued to worry about politics and the economy. Analysts said investors were too busy looking ahead to Friday's key unemployment report for September to do much investing. Signs of continued economic weakness could force the Federal Reserve to cut interest rates, analysts said. WYMER PLEADS GUILTY: Steven Wymer, a money manager charged with bilking clients of $174 million, pleaded guilty to criminal charges and was ordered to pay about $209 million to settle civil charges, the Securities and Exchange Commission said Wednesday. Wymer, a southern California financial adviser, managed funds for more than 100 clients, including government agencies. Wymer will be sentenced in January. PEROT'S PLAN IS STILL A FACTOR: Ross Perot may not become president. And his aggressive deficit-reduction plan may not be put in place. Still, Perot's theories hold with lots of voters. James Melcher, CEO of money management firm Balestra Capital, says the Perot plan would take 200 points off the Dow immediately. It would help technology stocks by stimulating R&D, but would devastate energy and transportation. GOLD, SILVER DROP: Prices for precious metals dropped Wednesday. On the Commodity Exchange, gold for current delivery fell 40 cents to $347.80. Republic National Bank said gold ended at $348.30, down 20 cents. Gold rose in London to $348.75 from $347.45. Silver bullion fell in London to $3.76 from $3.73. On the Comex, silver was quoted at $3.739, down from $3.762. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens at 3271.66 Thursday after closing up 4.86 Wednesday. The New York Stock Exchange composite opens at 229.46, up 0.56. The American Stock Exchange market value opens at 375.72, up 1.11. The NASDAQ OTC composite opens at 583.27, up 5.64. DOLLAR OPENS MIXED OVERSEAS: The dollar opens mostly up on Thursday. It opens at 0.5642 British pounds, up from 0.5621; 4.7970 French francs, down from 4.8200; 1.4180 German marks, down from 1.4125; and 120.00 Japanese yen, down from 119.37. (As of 3 p.m. Wednesday. Source: First American Bank of New York.) SPECIAL PACKAGE ON OCTOBER: AUTUMN WEAKNESS IS A QUANDARY: October is not a strong month for the stock market. On average, the Dow has fallen 0.2% from start to finish every October since 1915. All other months except May and September register average gains. Analysts are hard-pressed to explain the autumn weakness. Summer tends to be a strong season for stocks, so selling to take profits in September and October seems natural. STOCKS MAY RISE THIS FALL: That's one argument. And if the inverse also holds - that stocks should rise in the autumn after a weak summer - then this year may be proving it correct. Breaking with historical averages, the Dow rose slightly in September - following a disappointing summer. Still there is plenty evidence that October - the month investors really watch - will remain tradition-bound. STRATEGIST SAYS HOLD OFF: Al Goldman, strategist at A.G. Edwards in St. Louis, says there is reason to worry this October. He says the month will see plenty of negative earnings surprises as companies report third-quarter results. His prediction: The Dow will land between 3100 and 3150 by Election Day, Nov. 3. If he's right, that's a 5% drop investors can avoid by paying attention to history and not buying now. (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