A digest of investment opinion from the world's leading financial advisers
"International pressures signal that interest rates, which often determine the future course of the stock market, are likely to remain basically firm," observes InvesTech Market Analyst (2472 Birch Glen, Whitefish, MT 59937). "Despite all the hype, hope and hoopla about an impending drop in rates, they have continued to climb in the five major industrialized countries. And inverted yield curves such as those that exist today almost always produce slower growth or recession when present on a global scale."- Investors who are concerned about the health of the general stock market but want to maintain a position in equities should take a page from the book of Merrill Lynch Basic Value "A" Fund. The fund has produced positive total returns every year since its inception in 1977. Its adherence to book-value investing has also allowed it to outperform the Standard & Poor's 500 over the past 10 years while taking a quarter less risk than the average equity fund. Recent favorite stocks: ITT, Royal Dutch Petroleum, GM, Reynolds Metals, Alcoa, Ford, Sears, Mobil.
- Home infusion therapy is the intravenous delivery of nutrients and medications to patients in their homes. It costs about 30 percent less than having these services provided in a hospital. According to Nancy Moyer of Ladenburg Thalman, "Home infusion is a $1.4 billion market growing 25 percent annually and fueled by four factors: an aging population, improved technology, growing acceptance and cost-effectiveness." Moyer's favorite home infusion stocks: Care Plus, Home Nutritional Services, Nichols Institute.
- You don't have to look beyond the NYSE for promising investments in foreign growth, observes Robert Sto-vall of Stovall/Twenty-First Advisers. "Many of America's best companies offer tremendous foreign exposure through exports or foreign subsidiary sales." Stovall's computer recently identified 200 large U.S. corporations with 40 percent of their sales in foreign markets. Most also have low debt-to-equity ratios. Among Stovall's favorites: Amdahl, Avery International, Chubb, Lawter International, 3M.
- "Our analysis of the junk bond market boils down to this," says Market Logic (3471 N. Federal Highway, Fort Lauderdale, FL 33306): "Junk bonds have been sold down so dramatically that their prices now discount every conceivable risk. Currently, the yield differential between junk bonds and gilt-edged Treasuries is about 7 percent. So if every junk bond in a portfolio defaulted over the next 15 years, that 7 percent annual loss would reduce the expected total return of a junk portfolio to what Treasuries yield now."
- "Bank `money funds,' regardless of their name, are not real money funds at all," cautions Donoghue's Mon-eyletter (P.O. Box 6640, Holliston, MA 01746). "Banks and thrifts have not created a worthy competitor for real money funds. Instead, they have pirated the generic name of an excellent service, deliberately trying to confuse investors, and then have not paid competitive yields."
- Only eight investment newsletter portfolios beat the S&P 500 during the first five years Hulbert Financial Digest tracked such performance, from June 1980 to June 1985. Only one of those eight, the portfolio of The Zweig Forecast, beat the S&P 500 (136.2 percent to 121.6 percent) in Hulbert's second five years as well, from June 1985 to June 1990. The other seven newsletter portfolios gained an average of only 63.5 percent during this second half-decade.