How Now High Dow?

MANY of the brightest gurus of Wall Street are scanning their computer screens with special attention these days, asking: ``How high can this stock market go?'' ``Is a market downturn about to begin?''

Wall Streeters see a stock market setting records in 1993, including new highs on major indexes such as the Dow Jones industrial average. Market insiders now talk of a 4,000-point Dow this year, up from the current range of around 3,700 points. But Wall Street also remembers the last time the market was on a record-setting spree in the mid-1980s, only to tumble 508 trading points in a tumultuous day of selling in October 1987. Could a big downturn occur again? In the past few days, the market has shown signs of fresh turbulence.

While most market technicians generally argue that a ``correction'' is months away - and only likely to occur in the 5 to 10 percent range at worst - they still note that caution is in order. Some fundamentals suggest an overpriced market. The bond market is also skittish, worried about a possible resurgence of inflation. And bond market turmoil can throw stocks into turmoil.

Still, investors continue to pour billions of dollars into stocks monthly, mainly through mutual funds. They do so largely because the interest earned by their passbook savings accounts, bank certificates of deposit, or money-market accounts is dismal. There have been few real long-range alternatives to the gains in stock earnings.

Moreover, the stock market of the 1990s is far different from the market of the '80s: A number of safety features have been imposed on trading to prevent a recurrence of 1987. And the overall market is more diverse. The NASDAQ market, for example, comprising smaller and medium-sized companies, increasingly rivals the giant New York Stock Exchange. Mutual fund companies offer new funds geared to stocks of overseas firms. More women and minorities own stock. ``Small'' investors have been returning to the market.

The bottom line, however, seems as true now as ever: The stock market is a way for individuals and institutions to own a share in the factories and businesses of the world community. It is not a place for idle speculation or indifference. And as any scorekeeper would concede, keeping alert to the daily stats makes sense.