Word: dow
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Stocks don't move higher for no reason, nor do they move higher for the reasons given in the newspapers such as "the market responded positively yesterday to a cease-fire in Bosnia." But it's not happy headlines that will carry the Dow to 5000. It's numbers--particularly, the earnings. The 30 companies in the Dow earned a combined $250 per share in 1994. So with the Dow perched just above 4000, it is priced at 20 times its operating earnings. This is on the high side of what the Dow normally sells for, so there...
This is where the optimists come in. The consensus of Wall Street's battalion of educated guessers, the analysts, is that the Dow's earnings will rise to $390 in 1996. This is a rather stunning jump over the current level, so this prediction has taken a lot of people by surprise. Apparently, all this corporate slimming down, cutting the fat, getting back to basics and restructuring is paying off. Companies that make it into the Dow have reached middle age and can no longer grow as fast as they once did, so instead of wasting money in a futile...
...General Motors selling off National Car Rental, and Sears divorcing itself from Allstate, attempting to maximize shareholder value. You've got 23 of the 30 Dow companies buying back their own shares--$50 billion worth in the past five years, according to Birinyi Associates. They are spending all this money for one reason: reducing the supply of stock will make the price go up. Charlie Clough, the chief investment strategist at Merrill Lynch, even thinks the fall of the dollar will help the Dow reach 5000. He sees Wall Street as a Mexico for Japanese and German investors. Already, foreign...
...things can get in the way of a 5000 Dow: runaway inflation for one, or at the other extreme, a severe recession. But if the analysts are right, we'll get to 5000 and then some, possibly within the year. Remember you read it here first, unless, of course, the analysts are wrong, in which case it was their mistake all along...
...days like grazing beasts--not good, not evil, just hungry. They form green-sounding lobbying groups and contribute millions to lawmakers. Something called the "National Wetlands Coalition" raised $7.8 million from British Petroleum, Georgia Pacific, Kerr-McGee and Occidental. The "Clean Water Industry Coalition" raised $15.8 million from Caterpillar, Dow, Du Pont and Union Carbide. Al Meyerhoff, of the Natural Resources Defense Council, says, "Industry lobbyists are writing laws and legislative history. They're doing everything but voting, but maybe that's next...