Remember last January? The stock market roared up the tracks like a runaway freight train. In 21 trading days, the Dow Jones industrial average gained 262 points, or 13.8 percent, as it climbed through the 2000 and the 2100 levels. The Johnston, Lemon index of 30 blue-chip Washington area stocks rose 8.9 percent. All in all, stock prices went up more in January 1987 than they did in some previous years.
What about this January, the month just concluded? It wasn't thrilling. The stock market puffed along the tracks like the Little Train That Couldn't. The Dow started the year by going up for four straight days, gaining a total of 113 points. On the fifth day, it fell 140 points, giving back all it had gained and more. And all this was happening at the 1900 to 2000 levels -- about where the Dow had been a year ago.
When January trading ended Friday, the Dow stood at 1958.22, only about 20 points above where it started the year. The gain was barely 1 percent. And the Dow stocks, which once were the biggest gainers, are now lagging behind the other indexes.
The Standard & Poor's 500 rose 4 percent, the American Stock Exchange index was up 3.4 percent, the Wilshire index of 5,000 stocks, the broadest measure of stocks, rose 4.2 percent.
The Nasdaq over-the-counter index did best for the month, rising 4.3 percent, as smaller, secondary stocks made a long-awaited comeback.
Washington area stocks, at least the big ones, did not share in the gains. The Johnston, Lemon index rose only 0.62 percent, a virtually flat performance for the month.
Meanwhile, the 180 stocks listed in the Washington Business area stock index list rose $16.27 to an average of $16.94, a gain of 4.1 percent.
Some Washington area stocks enjoyed strong January performances; others did not. The pattern was interesting and a trifle strange.
Stocks that were badly beaten up in the last few months rebounded nicely. But stocks that were relatively strong in the weeks after the market crash began to slide in January.
Among the January gainers were: NVRyan, home builders, of McLean, up from $3.75 to $5.75 (53.3 percent); Polk Audio, sound equipment, of Baltimore, up from $4 to $5.75 (43.7 percent); Cerberonics, a professional services company, of Baileys Crossroads, up from $2 to $2.75 (37.5 percent); Schwartz Bros., wholesaler of records and videos, of Lanham, up from $2 to $2.75 (37.5 percent).
Also, Dominion Federal Savings & Loan of McLean, up from $6 to $8 (33.3 percent); Interstate General Co. LP, real estate, St. Charles, Md., up from $5.50 to $7 (27.3 percent); and CACI International, professional services, of Arlington, up from $2.25 to $2.81 (25 percent).
Among the January losers were Rowe Furniture of Salem, Va., down from $13.50 to $9.63 (28.6 percent); Classic Corp., water beds, of Jessup, Md., from $1.94 to $1.50 (22.6 percent); Reynolds Metals of Richmond, down from $47.63 to $38.13 (20 percent); VM Software of Reston, down from $9.50 to $8 (15.8 percent); Strategic Planning Associates, management consultants, of Washington, down from $19 to $16.50 (13.2 percent); Dart Group, down from $77 to $67 (13 percent).
There is an interesting tale in the losers' list.
At the end of January, one year ago, we reported that VM Software had gone up from $20 to $33.25, a one-month rise of 66.3 percent. Eventually the stock got to $45. But then the company's profits started to ease off and VM Software, which had been one of the area's fastest growing companies, started to tumble.
It fell to the $14-to-$18 range before the crash and to $8.50 after the crash. Thus, from January to January, VM is down from $33.25 to $8, an eye-popping loss of 76 percent, proving again that even the hottest stocks can cool off.
As for Reynolds Metals, which has been falling recently, it is worth noting that the stock was one of the top gainers of 1987, picking up 138 percent as the sales of aluminum skyrocketed. While Reynolds' big run may be over, analysts think that the company's Australian gold reserves will fatten profits in the future.
In politics, they used to say, "It takes a lot of money these days even to get beat with."
That's how the folks involved in the proxy fight at Columbia First Federal Savings & Loan must feel. Proxy fights involve lawyers, accountants, proxy solicitors and others. And it all costs money. Columbia First's management said it would spend about $500,000 for its campaign to reelect three of its directors in the face of challenges from businessman Harold N. Goldsmith and two of his colleagues. Goldsmith said his expenses would come to $165,000.
When Columbia First Chairman Dewitt T. Hartwell complained to stockholders about the amount of money the thrift was being forced to spend in the fight, Goldsmith countered by pointing out how much less he was spending.
"Maybe that tells you a little about our management styles," Goldsmith said.
Analyst Stephen M. Goddard at Scott & Stringfellow expects profits at Crestar Financial of Richmond to show a solid gain in 1988. That would be welcome news at Crestar, the former United Virginia Bank, where profits dropped from $2.87 a share in 1986 to an estimated $2.20 a share in 1987. But Goddard expects to see the bank reach $3.20 a share in 1988.
The stock is selling at $23 a share, with a current yield of about 4.5 percent. Its book value is $19.51 a share. Crestar's return on assets (ROA) on Sept. 30 was 0.63 percent. (A 1 percent ROA is generally considered a favorable level.)
Crestar, Goddard notes, has had its problems, some of which were tied to its corporate restructuring after its mergers with NS&T Bankshares in the District and Bethesda Bancorp. The new Crestar now has assets of $9.9 billion.
"We believe the combination of recent corporate streamlining, increasing loan reserve coverage, management reorganization and a renewed strategic focus should greatly enhance Crestar's earnings in 1988 and provide significant momentum for stock appreciation in the coming months," Goddard said.
Jefferson Bankshares of Charlottesville, looking at the $24 price of its stock, has decided to buy back an additional 150,000 shares. The bank now has 4.5 million shares outstanding. Hovey S. Dabney, the bank's president, said, "In our opinion, the stock was and continues to be undervalued. In addition to showing support for the stock at current prices, the purchases are expected to have favorable effects on earnings per share and return on average shareholders' equity." The stock has a yield of 4.9 percent and is selling for eight times earnings.
A new guide to the nation's mutual funds has been published by the Investment Company Institute, the mutual fund trade association. Because of the rapid growth of mutual funds, the guide now lists 2,300 funds -- load and no-load. Of that number, 900 are new listings. The guide also provides toll-free telephone numbers for most funds. To order the Guide to Mutual Funds, send a check for $2.50 to: Guide, Investment Company Institute, 1600 M St. NW, Washington, D.C. 20036.