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Archive for Wednesday, November 4, 1992

BROKERS FORESEE FEW MARKET SURPRISES DURING TRANSITION

November 4, 1992

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Two local stockbrokers say Gov. Bill Clinton's presidential victory isn't likely to deal investors many surprises in the coming months.

"I would guard against being pessimistic," said Tana Ahlen, manager of Dean Witter Reynolds Inc.'s Lawrence branch.

After 2 hours of trading this morning, the Dow Jones Average of 30 large industrial stocks was off just 7.29 points at 3,245.19.

"There's going to be a mixed reaction in the markets with some volatility short term," she said, predicting some swings in stock prices as the president-elect tips his hand on Cabinet appointments and economic policy.

"Longer term, I think we're going to see some upward bias," she said.

Stocks Ahlen predicts investments that will do well in the coming year are those that are sesitive to economic recovery, such as auto and industrial equities. Dean Witter is projecting the Dow to end the next 12 months at about 3,600, she said.

Steve Edmonds, vice president and branch manager for Piper Jaffray Inc., agreed that economic recovery is under way but said he doesn't expect the stock market to perform strongly during the next year. During the next 12 months, Edmonds predicts the Dow will trade in a range with a ceiling of about 3,550.

Stocks Edmonds said may react favorably to a Clinton presidency are those in industries related to infrastructure improvements, such as heavy construction equipment manufacturers, or low-cost health care, such as health maintenance organizations.

"Municipal bonds may be better investments because if Clinton raises taxes on the rich, they may become attractive as fixed-return investments," he said, noting that income from municipal bonds isn't subject to federal taxes.

For mutual fund investors, Edmonds said the most promising results might be in the growth-and-income fund category. Edmonds said he likes the fact that those funds buy dividend-producing stocks, which provide higher yield and a cushion against erosion of value.

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