Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Fri, May 22 1992 Date: Fri, 22 May 92 05:21:01 EDT Message-ID: 05-22 0000 DECISIONLINE: Personal Investing USA TODAY Update May 22-25, 1992 Source: USA TODAY:Gannett National Information Network INVESTMENT LAW CHANGES PROPOSED: Mutual fund investors are in for major changes if proposals unveiled Thursday by Securities and Exchange Commission boss Richard Breeden unveiled are adopted. The proposals would amend the Investment Company Act of 1940, which governs mutual funds. Breeden released the proposals at the annual meeting of the Investment Company Institute, the funds' trade group. (For more, see special Changes package below.) RECOVERY ON TRACK, SAY EXPERTS: Two signs that the economy's weak recovery from recession remains on track were evidenced Thursday, experts say. The Labor Department said 406,000 people filed applications for unemployment insurance the week ended May 9, down sharply from 426,000 the previous week. The Wall Street Journal reported that Fed policy makers decided not to push down short-term interest rates soon. STOCKS SLUMP ON RATE WORRIES: The stock market staged a broad retreat Thursday, yielding to new doubts about the interest-rate outlook. The Dow Jones average of 30 industrials dropped 15.13 points to 3,378.71, bringing its decline to 19.28 points since a record high Tuesday. Thursday economic news and a media report cooled hopes that the Federal Reserve Board soon will ease interest rates again. BROKERAGE MERGER TALKS END: Primerica, parent of Smith Barney, and General Electric, parent of Kidder Peabody, have held talks - now over - about merging the two units and no deal was struck, Primerica officials said Thursday. Kidder Chairman Michael Carpenter reportedly told employees that merger talks between the two have ended. GE's stock ended down 7:8 at $76 3:4. Primerica fell 1:8 to $38 1:2. MORGAN STANLEY'S EARNINGS UP: Morgan Stanley said Thursday that its first-quarter profits surged 16% to $1.62 a share from $1.54. But its stock dipped 1 5:8 to $50 3:4. The company admitted that trading and sales, though strong, were below the records of first-quarter 1991. Other brokerage stocks fell. Salomon Bros. lost 1 1:8 to $32 3:8 while Merrill Lynch sank 7:8 to $46 7:8. DIAL CHIEF WANTS BETTER VALUE: Dial Chief Executive John Teets isn't happy with his company's market value and is personally working to fix it. He says Dial is now more easily analyzed and deserves a similar value as the market averages. The S&P 500 index trades at about 15 times estimated 1992 earnings. At Thursday's close of $36 1:2, Dial trades at less than 13 times average earnings estimates of $2.87 a share for 1992. STOCK COULD HIT $50 NEXT YEAR: Dial Chief Executive John Teets figures shares of Dial could jump 30% in two years, fueled by 10% to 15% annual earnings growth. Teets says he's comfortable with average earnings estimates of $2.87 a share for 1992 and $3.31 a share for 1993. If they are accurate and Dial gets the price-earnings ratio Teets expects, the stock should go to $43 fast and nearly $50 next year. GOLD DOWN, SILVER MIXED: Gold prices fell, and silver was mixed Thursday. On the Commodity Exchange, gold bullion for current delivery was $337.00 a troy ounce, down from $338.00. Later, Republic National Bank also quoted gold at $337.00, off 50 cents an ounce. Gold also fell in Europe and Asia. On the Comex, silver bullion settled at $4.063 a troy ounce, down from $4.080. Silver rose in London. SPECIAL PACKAGE ON CHANGES: SALES FEES PROPOSAL OFFERED: Among proposed changes to the Investment Company Act of 1940 unveiled Thursday is the deregulation of sales fees. Fund companies now set fund commissions. The SEC wants to let brokerages determine what their investors pay. Competition among brokers would cut commissions, the SEC says. The ICI says current rules are fairer: All who make the same-size investment pay the same commission. INVESTING WOULD BE EASIER: The SEC needs congressional approval, which some say is unlikely, to amend the Investment Company Act of 1940. The SEC also proposed making investing easier. Under the new propsal, investors would no longer have to get a prospectus before investing. The SEC would let investors send their initial investment with a coupon from newspaper or magazine ads directly to a fund company. NEW FUND TYPES WOULD BE CREATED: The SEC also wants to create two new types of funds: Interval funds and one-fee funds. Interval funds would let investors sell shares only at specified times - such as once a month. The rule would give fund managers time to handle big waves of redemptions. One-fee funds would have one flat annual fee, eliminating management fees, custodian fees and 12b-1 marketing fees. INDUSTRY SEES COMPLICATIONS: Some industry executives think the rules changes would only further complicate mutual-fund investing. "We've already complicated this business beyond belief," says John Bogle, CEO of Vanguard Group. SEC commissioners will review the proposals, starting this summer, before taking action. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Friday at 3378.71, after closing down 15.13 Thursday. The New York Stock Exchange composite opens at 227.47, down 1.47. The American Stock Exchange market value opens at 391.63, down 0.52. The NASDAQ OTC composite opens at 579.10, down 1.19. DOLLAR OPENS UP OVERSEAS: The dollar opens up on foreign markets Friday. It opens at 0.5505 British pounds, up from 0.5472; 5.4265 French francs, up from 5.3920; 130.20 Japanese yen, up from 129.62; and 1.6241 German marks, up from 1.6032. (As of 3 p.m. Thursday. Source: First American Bank of New York.) ADVISORY: Decisionlines will not be published Monday, May 25, in observance of Memorial Day. Decisionlines will resume publication on Tuesday, May 26. 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. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. 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