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 Mon, Oct 19 1992 Date: Mon, 19 Oct 92 04:38:13 EDT Message-ID: 10-19 0000 DECISIONLINE: Personal Investing USA TODAY Update Oct. 19, 1992 Source: USA TODAY:Gannett National Information Network O'HIGGINS SEES DOWNWARD TREND: Several bearish analysts see crashes in the future. Not a one-day plunge, but a series of spills or a gradual erosion that could smash stock prices. Near term, Michael B. O'Higgins who runs his own investment firm, says the market could drop 400 points before Election Day. Longer term, Randy Updyke of Updyke Associates, sees a 1600 Dow in a year, 900 within 2 1:2 years. (For more, see special Bear package below.) EUROPE HURTS U.S. ECONOMY: August's sharp drop in U.S. exports could be followed by a worse decline in September. The problem: Economies in Europe are slowing. Aggravated by the recent currency crisis, consumer confidence has plunged. So consumers aren't buying and that is slashing overseas revenue for many U.S. companies - though the weak dollar has been boosting sales of products overseas by making U.S. goods cheaper. REPEAT OF CRASH UNLIKELY: Monday is the fifth anniversary of the 1987 stock market crash. But while the market is not as much fun to play, a similar crash is unlikely. The long-term average gain for stocks is less than 11% - a better average for long-term investors than the yields being paid for other investments. And rules limiting computerized trading and halting trading in some cases make a one-day dive improbable. CHICAGO CAN TRADE WITH FRANCE: The Chicago Mercantile Exchange and the Marche a Terme International de France (MATIF), Friday were given regulatory approval to trade each other's contracts through the electronic trading system known as Globex. Globex is an after-hours automated global trading system developed by the Chicago Merc and Reuters Holding PLC. The Chicago Board of Trade is an equal partner. SLOW CONSUMER SPENDING HURTS: Stephen Leeb of "Personal Finance Newsletter" thinks the slowdown in consumer spending will undermine stocks of retailers and consumer companies. He likes builders of roads and bridges and environmental waste-cleanup companies - though most of those stocks have done little since pros fell in love with them three years ago. Other winners: Firms that manage corporate health-care plans. HOUSEHOLD NAMES HAVE DONE WELL: The fastest-rising stocks since the crash of October 1987 belong to companies in markets that can grow in good and bad times. The list of the top performers is full of household names: Home Depot, Nike, Harley-Davidson, Mattel, Gap and Fruit of the Loom among others. It also includes companies developing new technologies such as biotech giant Amgen and surgery-products maker U.S. Surgical. NEWSLETTER TRACKS NEWSLETTERS: "Hulbert Financial Digest" compared performance of newsletters during the October 1987 crash with performance for the five years ended in August. Hulbert's conclusion: Past performance is a poor benchmark for future performance of newsletter's recommendations. Only "Zweig Forecast," Switch Fund Timing" and Marketarian Letter" predicted gains in October and over five years. SILVERADO OWNER PLEADS GUILTY: The majority owner of the Silverado savings and loan pleaded guilty Friday to a felony charge of misapplying nearly $100,000 in the failed thrift's funds in 1986. Regulators estimate Silverado's 1988 failure debacle will cost taxpayers $1 billion. W. James Metz, 67, entered the plea before U.S. District Judge Jim Carrigan, who ordered a pre-sentence investigation. No sentencing date was set. GOLD, SILVER BOTH RISE: Gold prices rose Friday. On the New York Commodity Exchange, gold bullion $342.40 a troy ounce, up $1.40 from Thursday. New York Republic National Bank said gold rose $1.20 an ounce to $342.20. Gold rose in London to $342.55 from $342.20 Thursday. On New York's Comex, silver bullion settled at $3.706 per troy ounce, up 2.1 cents. Silver rose in London to $3.74 from $3.73 Thursday. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens at 3174.41 Monday after closing down 0.27 Friday. The New York Stock Exchange composite opens at 226.44, up 0.90. The American Stock Exchange market value opens at 367.33, up 1.70. The NASDAQ OTC composite opens at 582.61, up 3.97. SPECIAL PACKAGE ON BEAR: ANALYST SEES A 900 DOW: Analyst Randy Updyke predicts a 900 Dow within 2 1:2 years. "In severe bad markets, stocks sell as low as 70% of book value (which would be equal to a 900 Dow) and that's where we're headed," he says. Like many pros, he's bothered by massive debt, continuing sick economy and rich stock valuations. Beyond that, he's frightened by pros' belief that stocks have nowhere to go but up. DRUGS ARE AMONG FAVORITES: Updyke does have favorite short-term stocks: Drugs (Merck, Eli Lilly, Pfizer and ALZA); companies with heavy insider selling, such as GM, U.S. Surgical and Apple Computer; and brokers (Merrill Lynch, Salomon, Quick & Reilly and Schwab). Newsletter writer Stan Weinstein says the Dow has seen its high for the '87-'92 bull market. He sees a sloppy October and eventual erosion to 2600. LITTLE STOCKS LOOK BETTER: Weinstein says the market is two-tiered, "with the pee-wees looking better than the big guys." Fellow writer Charles LaLoggia sees many stocks off 25% to 35% the next year. Names include International Paper, General Electric and Alcoa. Likewise, UAL, AMR, Wells Fargo, Citicorp, Chase Manhattan, Aetna and CIGNA. (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