How business, doctors and journalists prey on your food anxieties I

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America's Infrastructure Is Crumbling. There Is Not Enough Money in the Public Exchequer to Pay for Its Rebuilding . If You Supply, Construct or Finance Infrastructure, You Must Consider Attending or Sponsoring . ]FoIbQ'S N1dgZ111L' presents ~ Rebuildin ..~ -~1VIE C,,~ _ _ _ ,N0V29-DEC 1,1995 •THE CAPITALHILTON •'WASHiNGTON, DC The Third Amual Conference of Business, Investment <strong>and</strong> Government Leaders on Rebuilding, Developing <strong>and</strong> Investing in America's Infrastructure FORBES ASagazine, in partnership with The National Association of State Development Agencies <strong>and</strong> the Edison Electric Institute has developed the Rebuilding America conference as a fontm to promote the exchange of views <strong>and</strong> strategies for developing, rebuilding <strong>and</strong> financing public/private construction projects . During this three-day event, eleven months before our national elections, <strong>business</strong> executives, investors <strong>and</strong> government representatives will exchange views on private-sector investment <strong>and</strong> privatization ofinfizstructure projects . ∎ Previous Pardcipating Sponsors : = am eri can Int erna tiona l Group w AT&T Nenvark Systems = d1dr.T -Compagnie Gdnerale des Eau.c = Banue Nationale de Pars = Barba-.Arlthon Intemational Inc . = Bech:el Enterprises, Ir.c. - ~ B radley, arant, R ose & te ~ Coopers & Lybr<strong>and</strong> ~ CS First Boston - ~ Deutsche Bank AG Fngineering News-Record ® ~ Enron Corporatioa ~ Financial Guarznty Insurance Company .~ GE Capital ∎ ~ Goldman, Sachs & Co . ~ Goodwin . Procter & Hoar ~ I-liil International, Inc . ® = Johrson & Higgins W King & Spalding ~ = Lehman Brothers = Maver. Brown & Platt ® m 0¢den Corporation = Pepoer, Hamilton & Scheetz = Peterson Consulting Limited Parmerslilp ~ = Port aurhoatv of New York <strong>and</strong> Veu~ Jersey = Price 6t'aterhouse . = Raytheon Company = Stone & Webster Enqineering Corporafion - = Thelen, ',Iarrin,Johnson & Br.dges ∎ = Tucker dlan Ls . w Union Bank of Switzerb<strong>and</strong> ® = United Infrasaucme Company = Rillls Corroon ∎ ® - . .- r°~°~ Yes, please send me more informzson <strong>and</strong> a Eee aroqram brochure as soon vs t is msilable . ~ .7fl~ I~tOb{ail chis coupon to CYiC 200 C'nnecdcur l~ enue, Norwalk, CT 06856-4990 ~~tlfi ftll i'~ . ....... Or call (800) 243-3238, tax (303) 857-1C75 or'mmrnet N evenr .consuldr.gwadeshox cnm. ,~ . . . . , i Name__________________________ _-_____.___-- Ti1c___________ .__ . .__ \ j , Cnmpanv--___ , _________________ ._ .__-._._ _ . - _-, . . - ._ . . . ., . ._ _ . - ,- ._ .~-.~ . . . ~:4ddress-_____ __________ ._._- .-, __________ -_______________ `- _____ ._-_"are__Zip ____-____ Phone ___/___ Fax ___/___ ___ ~ . ! I om in[ereacd in: amending or recei .ing in(o.-marion pecaining to p --h .p . znatrnagy~i -k http://legacy.library.ucsf.edu/tid/agf97d00/pdf
I I STREETWALKER A Salomon bull Is ANYONE still bullish on Salomon Inc . (ss), which has deliN°ered incestors disappoinmtenr <strong>and</strong> continues to hemorrhage talene Streenvalker actuallv found a Salomon bull . He's Michael Flanagan, an analyst at Lipper Analytical Senices . Flanagan argues that the numbers indicate Salomon's <strong>business</strong> is becoming less ~olatile . It earned $81 million in the first quarter, a bit more than it lost in the second quarter. That was a swing of about S140 million quarter to quarter, as compared with a swing ofa quarer-billion dollars in the same two quarters last year . Flanagan is persuaded that the lower % nlatilirv means Salomon's traders are taking fewer risks . At the same time, Salomon's nontrading <strong>business</strong>es are doing better, with investment banking reNenue up sevenfold over the first quarter . Salomon will split some 535 million «~ith Dillon, Read & Co . for advising on the merger of Scott Paper with Kimberl%,-Clark . Flanagan points out that at a recent price of 35~/3, Salonton's shares are trading at just a shade oN er book value . Contrast that to Merrill Lynch's price of 1 .8 times hook . Of course, Merrill has been consistently profitable while Salomon has been consistently erratic, but Flanagan's point is that if Salomon can make money on a regular basis, there's ple n rv of room on the upside . The 1Vlicrosoft factor LIGHTHOCSS CAPITAL, a $135 million (assets) Houston investment firm, has been short a lot of technolog}'shares . One of its favorites is 5d8 million (estimated 1995 sales) UUNet Technologies, which provides computer users with access to the Internet . Microsoft has hired tiUNet (eU NT) for its nesv Windo«°s 95 . Microsoft oNrns 15% of UUNet . UUNet came public at 514 a share in May <strong>and</strong> climbed to 49 last month, giving UUNet a market capitalization of 51 .4 billion, although the company has Net to turn a profit . Even after failing to a recent 182 Hyping the net Uunet Techn°logies' stock price ( endine ]2595 ) 50 Nobody's ~ making money 1- ; 4 on the Internet? - ' UUNet's share 40 ~ ' price has tripled - f since May . 30 20 44r/, it is ovenalued, says Richard Hunter, an analvst at Lighthouse . Rakesh Sood, an analyst at Hambrecht & Quist, disagrees . He's recommending the stock . But even Sood concedes that li UNet %s-ill earn only 25 cents a share in 1996 . That would mean that the stock trades at 178 times next }•ear's earnings, Killjoy RL:esaT THE sS.tNTRA : Stocks return on average 10% a cear . That mantra has lured lots of no N ice imestors into the stock market . Maybe the mantra is true, but only for the probably fictional long-term imestor . For }'ears on end stocks can do much worse than that . From 1966 to 1982, on balance, the} \tent no- ~chere in pr ce <strong>and</strong> returned only a modest amount in di~tdends . Then thcy put on a spurt . John Bogle, founder <strong>and</strong> chairman of the Vanguard Group of mutual funds, reminds us of this frightening <strong>and</strong> patience-testing irregularity . In an article to be uublished this month in the Journal of Porffnlin ,4fasea,gerrzent, Bogle offers a method for predicting stock <strong>and</strong> bond returns . If he's right, people aho etoect 10°b, returns on equities over the next decade or so are in for a shock . Bugle predicts stock returns will slip to 8% oser the next decade-on average, meaning in many years returns will be lo\% er or even negatiee . Bogle reached his estimate bv taking the current dividend yield of 2 .5%, <strong>and</strong> adding to that one of m 'o sets of figures . For one set of figures L•e looks at data on di% idend growth ~ rates, <strong>and</strong> what the impact on returns will be if the price-to-dkidend ratio recerts to its historical a% crage . His alternative method estimates probable earnings gro vth over the next decade, <strong>and</strong> figures in the impact of changes itt'/F mtdtiples back to their historical median . Surprisinglv, the two methods result in virtuallv the same total retLLr n forecast : an aCCrage 3°.o per annum . Since about 2 .5 points of that is dividend yield, he is looking for anerat7e appreciation of iust 5 .5% a }'ear-taking into account the growth of reinvested dividends <strong>and</strong> capital return . Not exactly ~x hat the ne%cer generation of investors has come to eapect . Ho~c seriouslp should one take Bogle's numbers Very . Using s milar metltods, he predicted that stocl s «ould show average returns of 8 .7% per year in 1990 9-4, <strong>and</strong> his estn matc N.as right on the nose . By Bogle's reckoning, bonds will be more competiti~e with stocks than they have been in recent years . He predicts that bonds will vieid a shade under 7% annuaih' over the decade . <strong>How</strong> does he flgure that? Simple . He just takes the current yield on 30- aear Treaswys, pointing out that changes in the market price of bonds even out over long periods, lea% ing income as the driving factor. Of course, tltat still leaaes stocks with a tax advantage os-er bonds so far as individual incestors are cottcerned . «ith bonds, the [as is your partner on ere :y interest payment . With stocks, most ofthe return is from capital gains, v~hidh are taxed at a lo%~°er-<strong>and</strong> deferred-rate . c ,rbes . A t, Su st 1 4 ,199, 2046673438 F http://legacy.library.ucsf.edu/tid/agf97d00/pdf
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The "FlieQerchronogjaph" from IWC .
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ForbesS GUBUST 14. 1995 • VOLUME
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M1i How Many Peopl
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t~a +\ ir,f ressi,e\~ f~er, . Your
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Sarah knows a lot about diabetes .
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`Surprise me . Give me more power t
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1; ,iile "downsizing" rnaiv not be
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Bangkok . . . The beet of both worl
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The disaster cane as no ereat surpr
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Mazda presents a new take on the ol
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"With ail thy getting get underst<s
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ery fifty-6ce minutes Old Faithful
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Other Comments Waffling Away the Ti
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There's a lot than you pro VISION.
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Commentary on events at home <stron
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One of the largest teams at the Oly
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I "'I ~ 1 1~ 11111J r iiiil ;l~~~ i
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ie niercern.visenr SL-Class . For m
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_ THE STOCK MARKET WILL CRASH ,500
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Rogers and Cronk d
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ket . They're reluctant but hase li
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~ear, cellular operators, dri%en bv
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Remember your first time driving al
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I Toshiba Multimedia /100, 0 sA1
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I ~ , I SOUNDS SO REAL, PEOPLE WILL
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Using phony invoices, importers are
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ADVERTISEMENT 2 THE SKYTEL U .S . C
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ADVERTISEMENT 4 The Golf Club of Ge
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under par, matched a $3,000 first-p
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Riviera Country Club, Pacijc Palisa
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I ADVERTISEME*+'C 10 I o~¢t~G0LPr9
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ADb'ER'TISESiEVf 12 T H E S O U T H
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ADVERTISEMENT 14 The other Pilgrim'
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Wvnstone Golf Club, North Barringto
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ADVERTISEMENT 18 and</stron
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ADVERTISEMENT 20 The Creek Club . L
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ADVERTISEMENT 22 I where they recor
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WE CAN GIVE YOU VIRTUALLY EVERYTHIN
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204G6"13338 BUSINESS REPLY MAIL FIR
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One of the great success stories of
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ADVERTISEiv1E:VT I he son of a free
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i 1_ Comdisco I 9 1 ~ !ohn Vos :cky
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Innkeeper Henry Silverman has hundr
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i i i Patel, Inc. Patel), whose com
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Mylan Laboratories Making tablets i
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OUR FINANCIAL SIDLLS HELPED ONE COL
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IN voVATWE PROJECT FiNANciNG FOR A
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"With the Optra line, Lexmark has e
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http://legacy.library.ucsf.edu/tid/
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Our pilots have to fly over a milli
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A D V E R T- S E M c- N T B HYu N D
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A D v- R T I S E M E N . 8 THE I,G
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A D V E R T I g E M E N T C DAEWOO
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The relationship between father <st
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Daewoo Sells Solutions 11 r(,o o& E
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Forbes Special Offer r Bill me . -1
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A D V E R T I S E M E N T KORE A N
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A DV c R T I S E M E N T 2 0 ASIANA
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W Q n O_ i -j Z a ~~ o E P o a~ o -
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The supreme irony of World War II-<
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World War II U,S . arfi`lery, 1938
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Page 133 and 134: I ∎ Health scare share a lot of t
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Page 139 and 140: Uncle Tobia, who cooked for a pope,
Page 141 and 142: TRW Today In 1994, 7RW's sales <str
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Page 145 and 146: SPECIAL ADYERTiS1NG SUPPLEMENT a 0
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Page 157 and 158: In the success of new electronic ga
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Page 193 and 194: l i COLLECTORS "Pay the $2" A resal
Page 195 and 196: FORBES MARKET C0 L* A* S* S * F# I
Page 197 and 198: °Tne more thirgs change . . ." 70
Page 199 and 200: Prevention magazine chose LeSabre f
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