Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Mon, Apr 20 1992 Date: Mon, 20 Apr 92 05:42:18 EDT Message-ID: 04-20 0000 DECISIONLINE: Personal Investing USA TODAY Update April 20, 1992 Source: USA TODAY:Gannett National Information Network SMALL STOCKS HAVE BACKERS: Some Wall Streeters are still bullish on small-company stocks despite the beating they have taken for more than two months. Last year's stars could be turning into this year's dogs. Since setting a record Feb. 12, NASDAQ's over-the-counter composite - a measure of small-company stocks - is down more than 8%. Meanwhile, the Dow Jones industrial average rose 3% to another record. (For more, see special Small package below.) MOVE MAY BUST SHORTS: Fairchild Corp. will announce plans Monday for an initial public offering of its Rexnord unit, a move that should boost Fairchild's stock price. The company, which has a hefty short position of 709,800 shares, is an apparent target of short sellers. Fairchild plans a late-June offering of 8 million common shares of Rexnord at $21 to $23 each. Fairchild closed Thursday at $4 5:8. REXNORD EARNINGS SEEN RISING: Rexnord, a leading maker of power transmissions being spun off by Fairchild Corp., is expected to earn (after preferred dividends) about $1.50 a share on revenue of $530 million for its fiscal year ending June 30. It's expected to earn $1.75 a share on revenue of $575 million the year after. Later this week, Fairchild is expected to recapitalize its bank debt. SAVERS MOVING TO MUTUAL FUNDS: Up to $110 billion in certificates of deposit come due this month, and depositors are moving to mutual funds. April is the second-biggest month for CD rollovers, after October. The average one-year CD yields 4.14%, down from 6.39% one year ago. The Vanguard Group of mutual funds says account transfers from banks are up 88% from last year. Putnam Group reports a 6% increase. STUDY FAVORS RETAILERS: The stocks of retailers and clothing makers are among the best performers when interest rates rise, according to a study done for USA TODAY. Mitchell & Co. tracked how 4,000 stocks reacted to moves in short-term interest rates the past 40 years. Half of the study's best picks are retailers and clothing makers - which import much of their goods. Higher rates boost the dollar, making imports cheaper. SOME BUYING CHEAP BONDS: Cuba's Fidel Castro could be a good investment bet for big risk takers. Some bond traders are taking fliers on defaulted Cuban bonds selling at pennies on the dollar. Ditto defaulted bonds of Nicaragua. The theory: Both countries, out of economic necessity, will be forced to come back into the Western orbit and pay off their debts. Those planning to play shouldn't hold their breath. GREENSPAN NOT HAPPY WITH GROWTH: Federal Reserve Chairman Alan Greenspan says the economy's rate of growth in the first quarter was inadequate. While the growth of 2% at an annual rate was the strongest pace since 1989, Greenspan says it won't bring down the unemployment rate fast enough. Economists interpreted Greenspan's remarks as a hint the Fed has not ruled out another interest rate cut to fuel the recovery. MORE REFINANCING CAR LOANS: Several banks - having seen the popularity of home refinancing in recent months - have begun offering refinancing plans for auto loans. Some banks and credit unions are offering rates as low as 7.9% on three-year loans as a way of attracting new customers who bought new cars two years ago at average rates of 12.25%. Among banks offering auto refinancing: NationsBank, First Chicago. SPECIAL PACKAGE ON SMALL: BIGGEST LOSERS WERE WINNERS: Analysts blame much of the OTC market's problems on the recent carnage among stocks of high-tech and biotech companies. Former highfliers such as Amgen and Borland have tumbled. Little wonder so many people are worried about the small-stock rally: The stocks now taking the biggest falls were the ones that led the rally last year, when the OTC composite index soared 57%. CYCLE HAS YET TO RUN COURSE: Bob Czepiel, manager of the Robertson, Stephens Emerging Growth Fund, points to a popular argument that small stocks run in cycles of about five years. They typically lag big-company stocks for five years, then lead them. Small stocks trailed from mid-1983 through 1990 before pulling ahead. If February was the end, that means the small-stock rally stopped almost four years early. OTHERS TO STEP UP: Lawrence Helfand, market analyst at Rodman & Renshaw, says biotech stocks are a lost cause. Czepiel doesn't expect high-tech stocks to regain their strength until later this year. He says a number of service-related companies such as specialty retailers, restaurant and cellular-telephone companies will be investors' next favorites. (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Monday at 3366.50, after closing up 12.74 points Thursday. The New York Stock Exchange composite opens at 228.90, down 0.25. The American Stock Exchange market value opens at 392.64, down 1.52. The NASDAQ OTC composite opens at 591.81, down 8.22. Stock markets were closed for Good Friday. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. 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