European Stars and Stripes (Newspaper) - November 13, 1991, Darmstadt, Hesse                                Wednesday november 13, 1991 the stars and stripes a Page 15 Money matters think Small when buying Stock slow equity firms found to deliver in january by John Cunniff a business analyst new York a Here is a Stock Market tip the Small Stock anomaly becomes even More anomalous in january. This might not be exciting news to those unfamiliar with the background of the Small Stock thesis which says the smallest stocks tend to outperform the rest of the Market. Therefore some background in the late 1970s, Rolf Banz a University of Chicago researcher found that companies with equity below $90 million seemed to deliver higher returns than the Market in general Over a Long period. In the past 65 years according to Gerald w. Perritt who has extended Benz a research Small company stocks have returned an average of 17.1 percent a year compared with 12 1 percent for the Standard amp poor a 500-Stock Index. If that does no to seem like an important deferential be assured it is. An investment of $1,000 at the larger percentage grows to More than $2,200 in five years while a Miliar investment at 12.1 percent lags at less than $1,880. Over longer periods compounding widens the differences at an increasing rate and eventually the Gap expands to thousands of dollars or More than the initial investment itself. Seeking to determine causes of the Small Stock effect academics have cited the peculiarities of smaller stocks one being a High percentage of management ownership. Manager owners tend to be careful of their baby a growth. Although the Small Stock thesis is fairly Well established now a Small Stock funds Are among current Market leaders a researchers Are still making discoveries and one of them could hardly be More timely. Donald Keim a Wharton school researcher found that the bulk of the excess returns by Small company Stock portfolios is concentrated in january and that for the rest of the year the performance of Small ones parallels the big ones. Why this is so is still a mystery but Perritt a former University professor who publishes investment horizons a Chicago based newsletter on Small growth companies suggests it might have a lot to do with taxes. Briefly Small Stock investors typically Are Small investors who pay taxes. Having made profits on some of their investments they often seek to sell their losers in december to offset profits and therefore taxes. This according to the hypothesis tends to lower Small Stock prices in december. Suddenly however the tax Selling is Over in january and the Market has Many attractive buys. Demand grows supplies dry up and prices improve. The Low level of liquidity probably has much to do with it. Small companies often have a Small amount of Stock available since the owner often retains much of the Supply. Sometimes a Small demand can Nave a big Price Impact. Whatever the reasons Perritti a research shows that january is a Good month for both big and Small investors ant big and Small companies but mainly for the smaller of each. The Standard amp poor a 500-Stock Index a Mca Suic of larger companies Rose in 33 of the past 52 Januarius or 64 percent of the time. But Small company stocks had positive returns in 43 months or 83 percent of the time. Moreover Small Stock returns beat larger ones in 44 months or 85 percent of the time. Perritti a advice a beware of playing the Small Stock Market. To dip in and out of such stocks in january May be Foolhardy when you consider the commissions and taxes. A on the other hand a it definitely pays to be invested in Small firm stocks during the first months of the  a investors contemplating the Purchase of Small company stocks Early in 1992 might consider advancing those purchases to november and december. A a similarly investors who Are contemplating Selling some of their Small firm shares near year end should postpone those sales until late  Down debts can be a Wise investment by Albert b. Crenshaw the Washington Post Washington a certificates of Deposit have plunged real estate is in the tank the Stock Market has done Well but. Who knows Bonds look of but if interest rates turn up their prices will fall. So whereas a Good place to put your Money these Days especially if you have maturing cd or other Large sums pay Down your debts. A a it a the Best investment you can make a a said Stephen Brobeck of the consumer federation of America. For Many people of course this is easier said than done. But the dramatic decline in interest rates on deposits in recent months has provided new incentive. The rates that Banks and other lenders charge for Loans have declined much less rapidly creating an enormous Gulf Between what individuals can earn on their Money and what they must pay to borrow. Thus if you have a spare Dollar you can earn maybe there s no investment that i know of that will give you a guaranteed 14 to 19 percent return after tax a financial planner Dennis Gurtz 5 percent by putting it in the Bank but you can effectively earn 15 percent or 20 percent by knocking a Dollar off your credit card balance. A a we be always looked at debt As a potential investment with the most extreme example being credit card debt a said Dennis Gurtz of Dennis m. Gurtz and associates a Washington financial planning firm. A a there a no investment that 1 know of that will give you a guaranteed 14 to 19 percent return after tax a Gurtz said. He added that paying off those balances is a an absolute  Brobeck who has been highly critical of Banks for their failure to Cut consumer loan rates and the eagerness with which they have Cut Deposit rates conceded that Banks Are simply a charging what the traffic will  not Only is paying Down debt an effective investment therefore but it also helps Send a message to lenders that the traffic wont Bear the rates now being charged. For those who cannot pay off their consumer Loans there Are some ways to Cut the costs. For example you do not have to nay off your credit card balance to shift your account. If you qualify for a card with better terms than your current one you can Transfer the existing balance to the new card. Many women earn far Esi than men commission says Washington up nearly twice As Many women As men earn Only the minimum wage or less according to a report a National commission for women released tuesday. Thirteen percent of women earn minimum wage or less compared with 7.6 percent of men said the report by the National commission on working women of wider opportunities for women. But Many women earn just slightly More than minimum wage and 40 percent of the female work Force earns less than $10,000 a year the commissions study found. A full 63 percent of All workers earning minimum wage or less Are women the report said. The report added that Many employers remain reluctant to give women time off to care for a seriously ill child or to provide child care. A while some companies have begun to respond to the needs of working mothers resistance to change has been surprisingly Strong a the report said. A unfortunately changes reflecting the needs of working mothers in Federal state and corporate policies Are occurring slowly a too slowly to adequately support families in need or allow parents choices about How Best to care for their  the commission said employers must recognize that Many women Are working to make ends meet and not just to provide extra spending Money for their families. Almost 5 million working mothers Are the sole breadwinners for their families the commissions study found. And about 44.5 percent of All female headed households live in poverty. A in the United states our response to women sentry into the labor Force is to blame them for failing to carry the Burden of work and family successfully a said Irene Natividad commission chairwoman. A a but in neighbouring countries Public and private policies have been created to provide support. A a it a neither fair nor economically feasible to continue Down this path a she said. Plunging rates driving Small investors to stocks new York a Small investors Are returning to the Stock Market in the biggest wave of trading since the 1987 crash. Plunging interest rates on Bank certificates of Deposit and Money Market accounts have encouraged Many individuals to seek higher returns in 1991 is solid Stock Market. A the retail sector has been this years driving Force Quot said Jeffrey Schaefer research director for the securities Industry association the Industry a main Trade group. According to new statistics Small investor activity was up 18 percent on the new York Stock Exchange through the first nine months of the year while trading by big institutions and investment firms Rose at a slower Pace. Slams figures show that individual trading activity through retail brokerages is the greatest since the Trade group began breaking Down its statistics in 1987, and probably the highest Ever. A we find that people Nave Money and Are investing a said John w. Bachmann managing principal of Edward d. Jones amp co. Of St. Louis which has the nations biggest retail brokerage network with More than 1,600 offices. A some of the Money is coming out of the banking system where the rates Are just not very attractive a Bachmann said monday. According to the latest weekly Survey of 100 Banks by the newsletter Bank rate Monitor the annual yield on Money Market accounts a which generally consist of Short term Bonds a was Down to 4.86 percent last week. Yields on super now savings accounts fell to 4.32 percent and six month cd to 5.09 percent. All three Are at historic lows after plunging this year. A interest rates Nave come Down and that has tended to direct people to conservative High Quality stocks that pay dividends a said Richard Ryan a broker and first vice president with Robert w. Baird amp co. In Milwaukee. The Market also is benefiting from recessionary declines in other investments such As real estate and the movement of More pension and retirement Money into stocks