A Special Background Report On Trends in Industry And Finance
BET MORE ON STOCKS than on bonds, investors are told for now.</br></br>True, bonds and stocks each make up 50% of Merrill Lynch's recommended asset allocation for institutional investors. But bonds get less than an even break from most other strategists. In Portland, Ore., Shaw Management Co.'s clients are keeping about 45% of funds in equities, 30% in 10-year Treasury notes, and 25% in cash or cash equivalents. At UST Corp. in Boston, the typical mix is two-thirds stocks, one-third bonds.</br></br>The inflation rate in a year or so is likely to increase, pushing up interest rates, many investors believe. That would force down bond prices, so as to keep their yields competitive. Investors' inflation expectations for the next decade are rising, according to the latest monthly poll by Drexel Burnham Lambert, a securities firm.</br></br>Says Charles Gerrior, a financial planner at Cambridge Group, of Newton, Mass.: "Timing is dreadful for bonds."</br></br>BUSINESS LOSSES due to this fall's weather may be heavy.