"The ratio of Treasury bill yields to equity dividend yields is flashing a warning for stocks," says Staton's Stock Market Advisory (300 East Blvd., B-4, Charlotte, N.C. 28203). "This indicator has called major market turns remarkably well. It got investors out of stocks well before the 1981-82 decline, then back in before the super bull charged in late 1982. Now the ratio is again well above 2.0. Another sell signal has been given."
- Speaking of dividends, Sovereign Investors, the mutual fund based in Wayne, Pa., has built a solid appreciation record by concentrating on stocks with 10 straight years of dividend increases. This cagey formula allowed Sovereign to ride out market slumps in 1981, 1984 and 1987, while earning an average 16.8 percent annually over the past decade. Recent favorite stocks: 3M, K mart, Abbott Labs, G.E., H.J. Heinz, NCR, Fleet Norstar, Philip Morris.- Sales of heavy-truck makers are at their highest levels since the late 1970s, says Standard and Poor's Outlook (25 Broadway, New York, N.Y. 10004). "Demand has been fueled by robust activity in manufacturing, construction and wholesale trade, and by new models featuring improved engine fuel economy and added safety devices. Profit margins should benefit next year from full-capacity operations and cost-reduction programs. Our favorites, PACCAR, Mack and Navistar, trade far below the general market multiple."
- Stocks sporting single-digit prices usually have double-digit price-earnings ratios offsetting them. Special Situations Under $5 (7412 Calumet Ave., Hammond, Ind. 46324-2692) recently recommended three that don't. All cost less than $10 per share, have P.E.s below 10-1, and "have been posting higher per-share profits the last few quarters." The trio: Mark Controls, Publishers Equipment, Tech/Ops Sevcon.
- "One of the best things to be said for silver is that it has enormous value at today's price levels," says Gold and Silver Forecaster (16764 Ventura Blvd., Encino, CA 91436). "An ounce of silver costs about the same as an average lunch or a movie ticket. Yet it is an asset with a proven track record of appreciation during inflationary times. We're convinced we're going to have another explosive upmove in inflation and in silver prices during the next few years."
- Japanese investment in U.S. real estate surged 40 percent in the past two years. Analysts at Salomon Bros. expect this trend to continue, given the low dollar and Japan's high real estate prices. Salomon also expects the Japanese to expand their purchasing into the following cities: Washington, D.C., Boston, Chicago, Philadelphia, Atlanta, San Diego and Seattle, while simultaneously becoming more flexible and moving out of the traditional downtown office markets.
- If you're looking for a money market fund to secure some of those increasingly higher yields, pay close attention to the expense ratio, cautions Donoghue's Money Fund Report (Box 6640, Holliston, Mass. 01746). "A recent statistical study conducted by Donoghue's shows that, generally, a one-basis-point increase in the expense ratio means a one-basis-point loss in yield. In addition, the study shows that expense ratios explain two-thirds of the yield variation in 127 general-purpose money funds sampled."
Investor's Notebook reflects the opinions of professionals. It does not endorse specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited. (C) 1989 Universal Press Syndicate 4900 Main St., Kansas City, MO 64112