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, Oct 20 1992 Date: Tue, 20 Oct 92 04:35:16 EDT Message-ID: 10-20 0000 DECISIONLINE: Personal Investing USA TODAY Update Oct. 20, 1992 Source: USA TODAY:Gannett National Information Network ANALYST ADVISES CAUTION: Salomon Bros. analyst David Shulman advises taking a defensive posture in the stock market, sticking to high-grade utilities and stocks that would benefit from international turmoil. Currency problems in Europe are "a fundamental setback for the concept of globalism and a profound negative for stock prices" around the world, he writes. SHORT-SELLERS ARE BOOMING: Despite little activity from professional short-sellers, who bet on declining stock prices, short interest remains at record levels. One reason has to do with the rash of new stock offerings the past two years. When a brokerage underwrites a new offering for a company, he usually sells more initial shares than have been created. The underwriter buys it back when the price drops. CAPPIELLO GOES OVERSEAS: Frank Cappiello, who is starting three mutual funds for Rushmore Funds, plans to start by focusing on international companies that have little competition. Included are stocks he says you can put away for 10 years, such as Philip Morris, Gillette, Boeing, Student Loan Marketing Association and Telefonos de Mexico. MARKET WON'T HOLD AS IS: Don't expect today's stock market to hold at current levels, waiting for corporate earnings to grow to the point where stocks are fairly valued again. Investment adviser Stephen Leeb warns that "periods of strong profit growth have always coincided with higher interest rates." Higher rates push stocks down. NEWSPAPER STOCKS LOOK GOOD: Third-quarter results released last week by Gannett and Monday by Pulitzer and E.W. Scripps have analysts talking about stronger advertising revenue - and a possible industry rebound. Scripps earnings actually fell 45% - but a strike at The Pittsburgh Press was the cause. Pulitzer earnings jumped 116%, to 41 cents a share. Gannett reported third-quarter earnings up 34% to 56 cents a share. STOCK MARKET MAY LIKE CLINTON: Thanks to Bill Clinton, the stock market and the bond market may be parting ways. Though Wall Street usually favors right-of-center candidates, some strategists now think Clinton will be good for the stock market - at least in the short term. Clinton would push immediately for government measures to boost growth and create jobs by spending money to upgrade roads and bridges, among other things. CLINTON IRKS BOND TRADERS: Treasury bonds have been weakening in part because investors fear Bill Clinton's proposals would hurt bonds. They could add to the federal budget deficit, increasing the supply of Treasury bonds coming to market next year. The U.S. would have to offer higher yields to sell them. Their fears: If Clinton revives the economy, that could push interest rates higher and lead to higher inflation. BROKERS WANT BONUSES EARLY: Convinced that Bill Clinton will win the election and raise taxes, Wall Streeters are scrambling to get their annual bonus in December, rather than early 1993. The goal: Collect the bonus early, so it's taxable in 1992 - not 1993. Annual bonuses often are the biggest chunk of a brokers' pay. Morgan Stanley broke policy, and said brokers could get half of their 1992 bonus Dec. 28. IBM DIVIDEND SHOULD BE SECURE: Analysts generally agree IBM's $4.84-a-year dividend is secure for at least two years. If so, the stock, which closed Monday at $68 1:2, could drop 10 points - to less than $60 - over two years and investors would still be at a break-even point. A bigger decline would stun even resolute IBM bears, who generally believe Big Blue's worst case is a stock trading at about $60 a share. ORION WAITS FOR APPROVAL: Orion Pictures is optimistic that its reorganization plan will be approved at a bankruptcy-court hearing Tuesday. The plan calls for majority shareholder Metromedia to invest $15 million in cash in exchange for 50.1% of the stock in the reorganized Orion. The plan also calls for 49% ofthe reorganized Orion stock to be distributed to certain bondholders. MORGAN STANLEY GETS A BREAK: Morgan Stanley will call New York home at least 10 more years, Mayor David Dinkins says. The brokerage and investment house agreed to keep its headquarters - and 4,100 jobs - in the Big Apple in exchange for $40 million in tax cuts. The company had considered moving to Connecticut, which, along with New Jersey, has been wooing financial-services companies from the city. NATIONSBANK EARNINGS SOAR: The nation's fourth-largest bank holding company Monday said third-quarter earnings more than quadrupled thanks to improving credit quality and increased average loan balances. NationsBank has $118 billion in assets and posted net income of $350 million or $1.40 a share, compared with $81 million or 31 cents for the third quarter a year ago. GOLD, SILVER GAIN: Gold prices gained Monday. On the New York Commodity Exchange, gold bullion settled at $342.70 a troy ounce, up 30 cents from Friday. Republic National Bank said gold added 20 cents an ounce to $342.40. Gold rose in London to $342.85 a troy ounce, from $342.55 Friday. On New York's Comex, silver bullion settled at $3.718 a troy ounce, up from $3.706 on Friday. In London: $3.74 an ounce. DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens at 3188.45 Tuesday after closing up 14.04 Monday. The New York Stock Exchange composite opens at 228.84, up 1.80. The American Stock Exchange market value opens at 368.54, up 1.21. The NASDAQ OTC composite opens at 590.67, up 8.06. DOLLAR OPENS UP OVERSEAS: The dollar opens mostly up on Tuesday. It opens at 0.6119 British pounds, up from 0.6060; 5.0480 French francs, up from 5.0165; 1.4885 German marks, up from 1.4770; and 119.98 Japanese yen, up from 119.40. (As of 3 p.m. Monday. Source: First American Bank of New York.) 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