Drop in Dow was largest since 1974

Over the past quarter-century, the Dow's 35 percent, 30-month decline to last summer's lows are without precedent, observes John Rekenthaler of Morningstar Mutuals (225 W. Wacker Drive, Chicago, IL 60606). "Even the notorious 1973-74 bear market was neither longer nor a whole lot steeper than today's. So unless you think we're on the verge of another Great Depression, price history suggests that the stock downturn is about done."

-- Strong Opportunity Fund has provided 10.44 percent average annual returns over the past decade by focusing on deeply discounted stocks in "quiet" business sectors. The fund's rigid value methodology calculates a company's private market value and looks for both strong managements and competitive strategies. Recent favorite stocks: Apache, Devon Energy, Pepsi Bottling, Phillips Petroleum, Federated Department Stores, Waters.

-- The war on terror isn't limited to conventional battlefields. Les Alperstein of the research firm Washington Analysis expects many computer stocks to benefit from the rush to upgrade and integrate the outdated information systems of the FBI, CIA and other government agencies. "It's going to mean a lot of money for companies that do this work," he says. His two favorite players: Electronic Data Systems and IBM.

-- Money magazine recently studied those stocks with the best 30- year returns since the magazine's first issue in 1972. The top performers had average annualized returns ranging from 25.9 percent down to 20.9 percent: Southwest Airlines, Wal-Mart, Walgreen, Intel, Comcast, Circuit City, Forest Labs, State Street, Progressive. Money believes that seven little-known stocks currently exhibit many of the characteristics found in those winners: focused businesses, strong corporate cultures and indispensable products. The seven: BJ Services, Career Education, C.H. Robinson, Fair Issac, Lab Corp of America, Michaels Stores, Performance Food.

-- Treasury Inflation-Protection Securities (TIPS) are government bonds that adjust their prices upward as the consumer price index rises. So successful have TIPS proven, despite the relative dormancy of inflation in recent years that the only two funds that focus on them and have meaningful track records have vaulted to the top of the long-term government bond ratings, says Standard & Poor's. The duo: Pioneer Real Return (10.1 percent average annual three-year return), American Century Inflation-Adjusted Bond (8.9 percent).

-- How much money you need to retire depends on how much you plan to spend in retirement. But regardless of your expenses, you're going to need a fixed amount of capital to meet them. Charles Schwab's rule of thumb in such matters is that you'll need $230,000 in savings for every $1,000 per month you want in retirement income. So if you want to throw off $75,000 a year, you'll need $1.4 million.

Site of the Week: Go to www.investorlinks.com for a free financial directory site with links to, and descriptions of, more than 12,000 financial Web sites. It has unique sections such as Foreign Exchange and Investor Services that contain links to sites covering such unusual investment subjects as offshore banking, coins, stamps and art. Users can jump to message boards through the Stock Talk areas or link to available financial software.

Investor's Notebook is a digest of investment opinion from the world's leading financial advisers. It does not recommend any specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited.

Copyright C 2003 Deseret News Publishing Co.
Provided by ProQuest Information and Learning Company. All rights Reserved.