Word: interest
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Dates: during 1970-1979
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While the flight to gold shows that some investors remain worried about the long-term direction of the U.S. economy, the market decline early last week was considered to be a short-lived emotional response to higher interest rates. These both slow the economy and make bonds relatively more attractive than stocks. Federal Reserve Chairman Paul Volcker repeated that he is committed to throttling back the growth of money supply, and that interest rates would therefore remain high as long as the rate of inflation did. Indeed, the banks' prime rate for business loans climbed from...
...Interest rates, now at or near their peaks, will begin to fall because demands for loans will ease...
Other factors also contrive to make the market look fairly attractive. The last two bull markets started during recessions, after interest rates fell and investors began to sense recovery ahead. Also, stocks now are cheap. Corporate profits have almost doubled in the past four years, but many blue-chip stocks of big, old companies are selling at mid-1975 prices. The increasing number of corporate takeover bids suggests how undervalued they are. The Dow industrials are selling at 93% of book value, the worth of the assets minus the liabilities and divided by the number of shares outstanding. Thus...
...increase its stock holdings by at least 25% because it was fearful of missing the market altogether. Explains Research Director John Groome: "We may be premature, but we are going to be there when the market explodes on the upside." That is widely expected to occur when inflation, interest rates and the dollar show signs of moving in the right direction. As Christopher Johnson of Lloyds Bank in Britain says of Wall Street's future: "There is a boom market out there, but not for a few more months...
...target audience is great big Middle America." Still a vigorous hunter, fisherman and tennis player, although he has given up climbing mountains, Coleman plans to stay on as chief of the company dedicated to recreation as long as his health is hearty, his work is fun and his interest is keen. Says he: "I have told my employees that I intend to retire no later than the year 2000." That way he can embark on a life of leisure one year shy of his 100th birthday...