Saturday, August 19, 2000

Personal finance

Traders don't take a vacation

        So much for the theory that trading volumes slow in August.

        Maybe it's Wall Street's fickle tastes. Maybe it's market-timers trying to take advantage of an established pattern.

        Maybe unusually comfortable summer weather is keeping traders in the office and away from the beach house.

        Whatever the case, average trading volumes for the first two weeks of August were 40 percent higher this year than last. But that might not be a good thing, said Peter A. Sorrentino, director of equity research at Bartlett & Co. downtown.

        The fact that more shares are changing hands every day could be a symptom of less new money going into the market. People are selling in order to buy — and that could cause some higher volatility among individual stock prices, Mr. Sorrentino said.

        “It's like a zero-sum game,” he said. “Someone has to take a beating in order for someone else to have a good day.”

        But the funny thing is that in that trend of buying and selling, some former losers like TRW and Johnson Controls are turning into winners. Investors might have decided that value stocks are back in vogue.

What could lie ahead
               We can hope that the trading volume story will debunk another late summer/early fall saga. For the last three years, August has been the harbinger of a minicrash. Consider:

        • 1997: The Dow Jones Industrial Average peaked at 8259.31 on Aug. 6, but it ended the month down 7.7 percent at 7622.42. The Dow bottomed out at 7161.15 on Oct. 27— 13.3 percent off its summer high.

        • 1998: The Dow hit 9337.97 in July, but it slid through August to end the month 19.3 percent down at 7539.07. It languished in September recovering in October.

        • 1999: The Dow fell 4.4 percent in August's final week — from 11,326.04 on Aug. 25 to 10,829.28 on Aug. 31. The average bottomed out Oct. 15 at 10,019.71 — 11.5 percent off its peak.

        So far for August 2000, the Dow is holding steady. Maybe some people trying to time the market got out in June and July. But timing the market can be as unpredictable as timing when the sun will shine on that beach house.

        Speaking of market-timing, there's a safe way to try it — and help out some kids at the same time. It's the annual fund-raiser for the Big Brothers/Big Sisters Association of Cincinnati.

        It's called Stock Rally 'Round the Kids Contest. Pick three stocks, plus one tie-breaker, from the Standard & Poor's 500 Index. Turn in your picks, plus $25 per play portfolio, by Aug. 31, then watch the market.

        The stock picker with the highest returning portfolio as of Nov. 30 wins $1,500. Second place gets $250, third wins $150, fourth is awarded $100. Fifth through eighth places win free dinners. The last three places get free financial planning sessions.

        But perhaps the best prize goes to the kids — about $14,000 was raised last year for mentoring programs for 7 to 17-year-olds.

        Call 761-3200 or see

        Amy Higgins writes about personal finance for the Enquirer. You can reach her at 768-8373;; or Your Money, The Cincinnati Enquirer, 312 Elm St., Cincinnati 45202.


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