GOOD YEAR FOR STOCK MARKET

The U.S. economy will show steady growth during 1992.

This is the forecast from two nationwide brokerage firms A.G. Edwards & Sons and Edward D. Jones & Co. both headquartered in St. Louis.

"We expect to see strong growth in the economy by the second half of the year, despite a negative outlook which is being held by some economists and financial officials," said Marsha Limbaugh, manager of the A.G. Edwards Cape Girardeau office. "Growth in the economy will likely accelerate as the year progresses."

Joe Domian of an Edward D. Jones office here agrees.

"We've had a good year with the stock market in 1991, especially in December," said Domian. "We expect a continuation of the same."

Stock officials also feel that the 1992 presidential elections may provide a boost to the market's performance.

"Typically, the stock market has always performed well in pre-election and election years as the White House tried to avoid making any decisions which will upset voters," said Domian. "We could see the Dow Jones Industrial figures hit the 3500 mark in 1992."

Limbaugh and Domian agree that 1991 was a "very good year for stocks." The market in 1991 grew from its Jan. 2, 1991, opening of 2633.66 to within a whisker of reaching 3200, ending the year at 3168, a 20.3 gain. In 1992, the Dow surpassed the 3200 mark.

Other measures of stock prices also performed well. Standard & Poor's 500-Stock Index gained 86.87 points, or 26.3 percent for the year. The Nasdaq Composite Index the most popular measure of small stock prices surged 212.50 points, or 56 percent to 586.34.

Edwards' economists say lower interest rates and inflation are not likely to be resolved any time soon. The current long-term government securities rate is hovering between 7.50 and 8 percent.

Ray Worseck, chief economist of Edwards at St. Louis, added that the rate of 4 to 6 percent on CDs and government securities may become commonplace and stay that way.

"As a result, investors accustomed to higher rates will either have to be content with the lower returns, or, in their search for higher returns, accept a greater degree of risk on their investments," said Worseck.

While it may be difficult for investors to adjust to the lower rates, it would be a mistake to significantly increase the risk involved in the investments they own, said Limbaugh. "Investors should be cautious that they don't unknowingly take on inordinate risks," she said.

Limbaugh stressed that persons switching from a CD or government security to a higher-yielding instrument should check with their financial adviser to explain any added risks.

Actually, low rates are quite normal, Limbaugh pointed out.

A study of interest rates on long-term government securities since 1799, by the A.G. Edwards company, reveals that long-term government securities have been above 10 percent in only six of the last 192 years.

"Investors usually don't remember the periods of low rates," said Limbaugh. "But they do remember when the rates are unusually high."

Limbaugh noted that investors today actually are earning only slightly lower "real rates" of return, after the rates are adjusted for inflation.

"With interest rates on long-term government securities at 7.65 and today's low inflation rate at around 4.20 percent, investors are still earning a real rate of return of 3.45 percent," she said. "During the early 1980s when interest rates on the long-term government securities peaked at 12.67 percent, inflation was 8.90, leaving investors with a real rate of return of only 3.77 percent."

"We're off to a good year," said Domian. "When we look out there, we can see some things starting to show for another good year. Some big companies are announcing good earnings, and we feel other companies will see profit increases during the first half of the year. I imagine we'll be seeing the market going up by summer."

Domian said interest rates may increase slightly by summer, but he felt they would decrease again by fall.

Stock officials say some world events could also have an impact on the stock market and should be followed closely by investors. "When the 12 major nations of Western Europe adopt a set of uniform guidelines in late 1992, it will effectively lower trade barriers between their borders and offer opportunities for U.S. companies and long-term investors," he said.

Domian said 1992 could be a good year to invest on long-term investments.

"The longer term a person invests, the better the odds for making money," he said. "Traditionally, the stock market does well at least three of every five years."