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Monthly stock review and Benjamin Graham advice

By Dian Vujovich

Over the past few weeks I’ve read some investment pros who think the stock market is doing just fine, in a slowish kind of way. Others who think that this earning season will be a productive one. And still others who think equities will be going down the tubes. Way way down.

My simple and occasional little review of the 30 stocks that make up the Dow Jones Industrial Average show that prices since April 1 have changed. And not in a positive way. The DJIA closed on June 23 at 10,152.82. On April 1, it closed at 10.921.07.

Since April 1, it’s still the same four companies whose stocks have been selling under $20 a share: Alcoa (AA) closed on June 23 at $11.11, Bank of American (BAC) at $15.02; General Electric (GE) $15.08; and Pfizer, (PFE) at $14.46. All four off their April Fool’s Day prices.

And then there’s BP. Not a stock in the DJIA but one certainly being talked about. A lot. Some talking stock heads I’ve heard thought it was a buy at $30, others think it’s going to be a headline stock for years to come and not worth investing for a long while. BP closed today at $28.74. Over the past 52-weeks it’s been as high as $62.38 and as low as $28.56.

As for equities and their short-term 2010 future, things are looking rockier from here than they were a few weeks ago.

But if you don’t need your money anytime soon, so what.

In a recent Jason Zweig column in The Wall Street Journal, Zweig wrote about Benjamin Graham: “In November 1963, with the Dow at 740, the great investor Benjamin Graham declared that “in my nearly 50 years of experience in Wall Street, I’ve found that I know less and less about what the stock market is going to do but I know more and more about what investors ought to do.”

“Graham went on to counsel that investors should never have less than 25% or more than 75% of their money in the stock market—and that they should move toward the maximum as the market falls and toward the minimum as it rises. In late 1964, with the Dow just below 900, he advised keeping no more than 50% in stocks, and he reiterated that sentiment eight years later. My hunch is that he would probably say much the same around Dow 10000 as he did around Dow 1000….”

Zweig’s column is at http://tinyurl.com/299lztk .

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