Many pessimists point to the historically low 2.2 percent yield on the Standard & Poor 500 index as proof of the stock market's overvaluation. But the market's real yield, adjusted for inflation, is almost normal, observes Smart Money magazine (1790 Broadway, New York, N.Y. 10019). "When you subtract the current rate of inflation, now at 25-year lows, from the S&P yield, you get 0.2 percent. That's almost exactly the long-term average. There's no danger for stocks here."
- Crabbe Huson Equity Fund has appreciated an average 14.5 percent annually over the past five years by taking a skeptical attitude toward growth. It avoids unproved companies and popular industries, concentrating instead on financially strong stocks that are cheap either historically or relatively, and have a catalyst for recovery. Despite a risk profile in the bottom 2 percent of all growth stock funds, CHE has outperformed 70 percent of them. Recent favorite stocks: Burlington Resources, Louisiana Pacific, WMX Technologies, USG, Equitable, Consolidated Freightways, U.S. West Media Group.- The new telecommunications deregulation law immediately deregulated cable systems with annual revenue below $250 million or effective competition from a phone company (except via direct broadcast satellite). Larger systems will be deregulated over three years. This will be a boon to cable-company growth, according to Standard & Poor's Outlook (25 Broadway, New York, N.Y. 10004). The Outlook's favorite cable stocks: Cablevision Systems, Comcast, TCA Cable TV, Telecommunications Inc.
- "The young professional, still many years from retirement, should emphasize stocks with innovative management and the potential to grow much faster than the general economy," notes United & Babson Investment Report (101 Prescott St., Wellesley Hills, Mass. 02181). To that end, U&B recently constructed this eight-stock, high-growth Portfolio for the Young Investor: AMP (telecom equipment), Boston Scientific (medical devices), Cintas (uniform manufacturing), Columbia/HCA (hospi-tals), First USA (credit cards), Intel (semiconductors), Microsoft (computer software), Scholastic (educational services).
- "Enhanced" index funds try to outperform a benchmark index by making small bets on certain stock sectors or using index options and futures. But so far, only their claims have been enhanced. Just three of the 11 enhanced S&P 500 funds that were in existence at the beginning of 1995 beat their index, for example, observes Morningstar Mutuals (225 W. Wacker Drive, Chicago, Ill. 60606). "The remaining eight lagged the index by an average of more than 4 percentage points."
- Many investors like the inflation-hedging qualities of gold. But they don't like to lose the current income they sacrifice by holding gold stocks, most of which pay no dividends. To have it both ways, suggests Adrian Day's Investment Analyst (Box 3217, Silver Springs, Md. 20918), consider two Freeport Copper & Gold preferred stocks trading on the NYSE with current yields above the market average. One is indexed to gold (ticker symbol: FCXprC), the other to silver (FCXprD).
- Foreign investors are restricted to the Shanghai "B" Index when buying individual stocks in China, notes The Global Market Strategist (P.O. Box 5309, Gainesville, Ga. 30504). "Only domestic investors can trade the 'A' Index.