"There may be a recession in stock prices but nothing like a crash. Dividends are moving higher. A few years ago most investors could afford to invest in only one common stock. Today they obtain wide and well-managed diversification of stock holdings by purchasing shares in good investment trusts." If you're investing in today's historically high stock market and are encouraged by these words, consider their source: an investment column published in The New York Herald Tribune, Sept. 5, 1929.
- Gabelli Asset Fund has appreciated an average 15.2 percent annually over the past five years while staying in the lowest 1 percent of all growth funds in terms of risk. It has accomplished this neat trick by taking hundreds of small positions in stocks with impressive free cash flow, which, it believes, sell at a discount to their private market value. Recent favorites: Time-Warner, Chris-Craft, Pittway, Neiman-Marcus, IBM, AMR.- Aluminum prices have fallen precipitously from their January 1995 peak. Yet it's difficult to think of many manufacturing areas where aluminum isn't used. "Emerging markets will need more aluminum for everything from pots and pans to infrastructure," observes Everen Securities metals analyst Vahid Fahti, who expects prices to rebound 55 percent by 1998. Among the depressed U.S. aluminum stocks that would benefit: Alcoa, Alumax, Kaiser Aluminum, Reynolds Metals.
- Among roughly 10,000 public U.S. companies, fewer than 70 have posted higher per-share earnings every year for the past decade. Of these 70, all but a handful beat the market averages during that period. Many ranked among the decade's biggest winners. Dow Theory Forecasts (7412 Calumet Ave., Hammond, IN 46324) recently analyzed all these steady profit-gainers and recommended the five it thought had the best two- to three-year prospects: Citizen's Utilities A, McDonald's, Raytheon, Sara Lee, Schering-Plough.
- "Global bonds offer an interesting diversification," observes Forbes. "Last summer, when U.S. bonds were suffering along with U.S. stocks, some global bond funds - especially those that own Third World debt - were gaining in price. Over the past five years, the J.P. Morgan Global Bond Index produced a total return of 11.1 percent. Only two diversified funds beat that return: Standish International Fixed Income (up 12.5 percent annually) and T. Rowe Price International Bond (up 11.9 percent annually). Both are no-loads with lower-than-average expense ratios."
- Speaking of no-load funds, Kiplinger's Personal Finance Magazine (1729 H St. N.W., Washington, DC 20006) has the last word on that subject. "In recent years we've conducted two extensive studies comparing no-load (commissionless) funds with load funds. When loads weren't reflected in total returns, results for the two groups were similar. But when loads (sales fees) were factored in, no-load funds dominated the winners list."
- Stanford Professor William F. Sharpe, one of the fathers of modern portfolio management and winner of the Nobel Prize in economics in 1990, recently turned his attention to mutual fund performance and has been putting his findings on the World Wide Web. If you have access to the Web, you can take advantage of the Nobel laureate's research by contacting him at gsb-www.stanford.edu/(tilde)wfsharpe/.