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Show DA I L Y HERALD Sunday, September 7. 2003 THE WALL STREET JOURNAL The Weekly Guide to Managing Your Money http:Aimday. Miff 2003 Dow Jones t3 Company, Inc. All Rights Reserved. wsj.com Market Brakes: Is the Rally Slowing? By E.S. Browning fT X his month started out with a I bang for stocks, defying fears of a sharp decline 'in September, which traditionally is a down time for the markets. For a time, weakness and worry were nowhere in sight. Even battered skeptics were casting aside doubts and plunging into stocks, following a herd mentality that typically leads to excesses and regrets in the long term. ( On Friday, reality set back in and a dose of unsettling news that payrolls shrank again last month took some gusto out of the rally. But Friday's decline erased only a portion of the week's gains. While some traders continue to warn that stocks are overdue for a pullback of as much as 15, the major indexes still managed to finish the week with gains, and few investors were ready to throw in the towel. The Dow Jones Industrial Average managed to move 0.9 higher last week, marking its ninth week of gains in the past 10. Before the Friday pullback, it was trading at a high. The Nasdaq Composite Index, which is dominated by technology stocks, gained another 2.6 last week, pushing it to a 39 gain so far this year and a nearly 67 surge since its low last October. "The market is moving higher despite the fact that everyone doubts it," says Brian Pears, head stock trader at Victory Capital Management in Cleveland, the . arm of KeyCorp. "Whether it is sustainable or not, I don't know, but it is something we haven't seen for quite some time. And I think it is more sustainable than some are giving it credit for." Reasons for doubts are plentiful. Stocks look far from cheap, based on their current prices compared with their forecast earnings for the next four quarters. They took even more expensive com-- 1 Altemstd Rcuta For tht past three years, September lived up to its reputation as a rough month for stocks. This September got off to a more promising start, although a Friday sell-o- ff took the edge off the rally; Here's how the Dow Jones Industrial Average has fared in September since 2000 (left), and where it's gone so far this month dUfS. ii .1,1 Net -- 10 ,, lIl , i, l V , V a t$WTtr September 2003 Sourer WSJ Market Data Group look. , Some analysts worry that an "echo bubble" is being inflated that will cause another round of pain and grief when it eventually pops. A growing scandal involving improper sales practices by mutual funds also could roil stocks. Getting to the Basics Never mind, investors say. Something more basic is going on. Some people, at least, have shaken off their bad experiences of 2000 and 2001 and have begun feel- -' ing just a little bit greedy again. Their neighbors have begun bragging again about the great returns they are getting on their tech stocks. Bond yields are miserable. yields are worse. So even some skeptics are taking a deep breath and buying stocks again. "Terrorism fears don't seem to bother the market," says Warren Money-mark- THIS WEEK MCI Enters Crucial Phase: A fedbankruptcy-cou- rt hearing starting Monday will determine whether MCI, formerly known as WorldCom, can emerge from bankruptcycourt protection as planned later this year. Last week, an overwhelming majority of MCl's creditors voted to support the company's reorganization plan, which would pay creditors Diuion in casn, new kkhi or MCI stock and bonds. Former stockholders would get nothing under I the plan, Epstein, head trader at Kabrik Trading. "People are afraid of missing the boat. Every time the market comes in there are buyers. If you don't buy, you are kind of left behind." Adds Tim Heekin, director of trading at San Francisco brokerage firm Thomas Weisel Partners, "All last week people were sayis ing that they feel like a sell-of- f imminent, but we just don't seem to get it" He says he wouldn't be surprised to see a decline of 10 or even 15, but then, he says, he expects the gains to resume. "People are optimistic about the future," Mr. Heekin says. What's creating all this hope? For one thing, after nearly three years of repeated disappointments, the economy finally is showing signs of life. It isn't creating jobs, but it is creating revenue and profits for businesses. "We have had a flow of economic news on 'just about every front now for six or eight weeks, so people are starting to think we are on our way," says Alfred Kugel, chief investment strategist at Chicago anagement firm Stein Roe investment-m- Trade Organization's fifth ministerial conference runs from Wednesday to Sunday in Cancun, Mexico. Trade ministers from the 146 WTO mem- ber nations will try to make progress on reducing tariffs and boosting international trade, continuing the negotiations from the last meeting in Doha, Qatar, hi November 2001. S InfletkM The " tieta Reek Scrutiny: Index Friday will give the average price of goods in the rnaniifacturirtg sector, and Is improducer-pric- portant because these prices are often passed on to consumers. Other inflation indicators to watch: Thursday's reports on import and export prices and the money supply. Ratal Sales An One: On Friday we'll find out whether the shopping binge was enough to offset tost sales during the blackout, as the August retaileales report comes out Last week, several big retailers such as and J.C. Penney Wal-Ma-rt ra srsirr jKrai sKDfi I iiii Drid BaMt RiSJNQFCrrrUKTheNasdW Composite Index, which reached its Euro (riuLCmt Mufciyntr NmEaw Mh ArDoukto (eon skmooo 4300 Route 1 North ,NJL0SB51 WUba 8. Cwqr Jr. Vks Pumobit, SnrcuL Editions (U2M1M02S .. . Iill,awjebiijuiiiiiw Ma B. Cuapbdl Advutulno Dimctoi 003) is Thursday, up 33 fM .,. .'' 100 Liberty No Vbcfc, Stmt NX 10281 k 3, tw n 9 rr1' Jj interest rate. companies are also offering similar deals. Sites such as cardweb.com and bankrate.com can give you full listings. Just be sure to use your card a low introductory Many other sensibly and stay on top of your payments. If you slip up, you can watch months of hard-earnegains get eaten up in fees and interest on a single statement. "If you're the type of individual who does not pay your balance in these cards are not for you," says Paul Richard, executive director of the Institute of full every pay period, Consumer Financial Education in San Diego. Other pitfalls include taking out cash on your credit card. There is often an fee, a higher interest rate than on purchases, and no you start paying interyou have the money in your hand. Late fees also can be a painful penalty. And read the fine print for any annual fees or other expenses. Also check the annual percentage rate on your card, and know when grace period est as soon as the introductory rate ends. By Andnw Blackman f A -- 10 , I J QDG LLULK fg till n F 2083 ! A ' . I It I ll, Saturday, Sept. 13 J ' 1,1. I AS 8:30 a.m. to 3:30 p.m. at the Wyndham Hotel - made announcements of strong sales at their stores. LAST Mutual-Fun- d 2 1 5 W. South Temple, Salt Lake City mi Allegations: New York Attorney General Eliot Spitzer manager charged that a hedge-fun- d arranged with several prominent mutual-fund companies to improperly trade their shares, and thus profit at small Investors' expense. The Aire yoao getttDflugg tUne opost oiou off yoaoir Inffe? hedge fund, Canary Capital Partners, agreed without admitting or denying wrongdoing to pay $40 million in fines and restitution. Mr. comSpitzer said some mutual-fun- d panies also are likely to face Success Seminars principles present that strengthen women in every area of their lives! Women-to-Wome- Life n life-changi- Bofl&TracBng Charges: A former Goldman Sachs senior economist pleaded not guilty to charges of criminal Insider trading on the 2001 news that the Treasury was ending 30yearbond sales; his lawyer blamed "bad information man- Big Media Merger: Vivendi signed a preliminary deal to sell its film and TV assets to General Electric for equity valued at about $14 billion. Under the plan, GFs NBC unit would merge with Vivendi's Universal movie studio and theme ' parks, Its TV production group and three cable networks. GE would own 80 of the new media powerhouse end Vivendi about Price "1unte: In a move to Jump-stasates, Vivendi's Universal Music Group cut the suggested retail price of nearly all Its compact disks to $12.98, a drop of as hi practice, most of much as its CDs wiB now sell for Just $9.99. CD 32. ng You will learn: agement by the government." Goldman agreed to pay $9.3 million to settle related SEC civil allegations. 20. Oaraun Humourm d its Stockback MasterCard, THE WEEK and up to ... 11 on purchases at specific retailers. So if you put $10,000 on your Chase card, you would get back up to $1,100 if you buy from participating retailers. The Blue Cash card from American Express offers up to 5 back, depending on how much you spend and whether you carry a balance. Both cards have no annual fee and TIP OF far this yeat Kaudae, 2q rt . tech-stoc- k can get cash back if you your credit cards right. As credit-carcompanies compete for your business, they are are offering "reward" deals with some healthy rebates. J.P Morgan Chase, for example, offers 1 back in cash on every purchase on You hi)ericlftm(Kttrl7r(H)n(risl3st ' To tSfrn i presents ,'.,, how to create positive changes in your life; become more joyful and confident; use effective conflict management skills; decrease your stress and increase your self esteem; accumulate the wealth you desire without sacrificing quality time with your family; and much more! Crook Snoot Soma i Unlimited Living Utah's M:l;s , Trade Tata Begin: The World i fiber-opti- pared with their weak actual earnings of the past year. The economy is recovering, but a lot less robustly than many had hoped. Stock gains seem to be running faster than would be justified by the economic and business out- INVESTOR'S CALENDAR eral From Cards up to more than 20 times forecast earnings. If he is right, that would permit a gain from here, although not a big gain. The fact that stocks aren't inexpensive any more is one of two question marks hanging over the market's future. The other question mark is the economy. The problem there, in a nutshell, is that consumers and businesses alike overspent in the late 1990s. Consumers borrowed to the hilt. Companies took advantage of loans and from easy money-fro- m stock issues-- to raise funds and buy lots of new gear. Since then, consumers have continued to buy new cars, television sets and homes, beyond the expectations of most economists. I mmmamJmmJmmm M o But companies, still saddled with c production equipment and Investment Counsel. He thinks the networks that they aren't usDow could be back above 10000 by ing, have been spending less than usual. year's end. "While the U.S. economy has Tech Trouble? certainly responded to stimulation But Mr. Kugel already is beginby the Federal Reserve, growth has been at least slightly weaker ning to worry that the in almost every important catesurge, which has pushed the Nasgory"" than it was during recoverdaq Composite Index up 4070 since the year began, will have trouble ies from previous recessions, notes Jason Rotenberg of sustaining itself. He recommends firm Bridgewater Associthat investors avoid plunging too ates in Westport, Conn., in a refar into that sector, and instead focus on more traditional indusport. trial stocks such as Caterpillar, During a typical recovery, the Deere and International Paper. economy would be growing at an inflation-adjuste4 Mr. Kugel acknowledges that eva year by now, Mr. Rotenberg noted. Inerything isn't rosy. The broad Stanindex isn't dard & Poor's stead, it has been growing at less than looking cheap at the moment. In adjusted for inflation. Growth also was soft coming fact, it looks a little pricey. It out of the previous recession, in trades at about 18 times its companies' forecast earnings for the comthe early 1990s. And after a sharp gain following the end of the first ing year, a high price even assum-- , Gulf War, stock gains were muted ing that the companies manage to meet earnings forecasts. during that period, something Like many bulls, Mr. Kugel benewly exuberant investors might want to recall as they prepare for lieves that low interest rates make stocks more attractive than alterthe coming year. native investments. Because of Do you have doubts about the stock that, he thinks low rates justify a market's prospects for the rest of the price for the S&P 500, which he thinks can move year? Write: forunjunday03ni.com i MX 5 SeatMten Pravtaw Receive Cash attend the Seminar, simply recister m or call Beclxy online at To i7VJiv.u-l-Lco- at |