Q. I love conspiracy theories and just came up with this one. What would prevent the incumbent federal government from buying just enough stock on a daily basis to keep the market from taking a nose dive and perhaps driving it up just a tad before the election. They could then sell it off slowly after the election if they win or dump it around Jan. 1 if they lose. Didn't I read that on the average the market goes up in the year before an election and drops in the year after? Some force is at work to prevent a big correction.

---S. G., San Antonio, TX

A. Lack of money makes this theory of poor starter. With daily trading volumes in the 400 million share range, providing market support would cost far more than the government has. Remember, it starts from a monthly net loss position.

One repeated lesson of history is that governments, no matter how powerful, can't overcome market forces. Governments that try to support their currencies at unrealistic levels inevitably lose, big time.

What we've got here, if you want to worry, is a level of confidence in the power of stocks that has not been seen since the late sixties, early seventies. Valuation levels, thankfully, are not as high as they were in 1971/1972 but it is time to start asking whether Coca-Cola is really so good we should pay 38 times trailing earnings. Ditto the 37x multiple on Gillette or the 41x multiple on Ralston Purina. Fortunately, there are many, many companies that are selling at an earnings multiple about equal to realistic expected earnings growth.

An Achilles heal for this market? Here are three:

• Foreigners decide they own enough Treasury debt and don't buy anymore, maybe sell some of their holdings. That would raise interest rates and probably trash the dollar, or both, causing instant inflation.

• War erupts in the middle east. Iraq vs. Iran; Iraq invades Kuwait again; the Saudi government is overthrown by Iran-supported radicals, etc. Oil fields burn, production plunges, and oil prices soar as millions of sport utility vehicle owners start to wonder about the trendiness of owning a vehicle that gets 15 miles per gallon on a good day .

• The Mena Airport- California urban drug sales- CIA connection stories turn out to be true, discrediting BOTH parties and creating a major government crisis immediately after the election. Any devoted conspiracy theorist should get on the world wide web, pick a search engine, and type the word "Mena." This is what you might call the Manchurian Candidate scenario, if you are a Richard Condon fan.

Will any of this happen? No one knows. All we do know is that there is a good chance anyone who was investing in stocks in January, 1995 is probably 50 percent richer today. At some point, market appreciation like this becomes an economic force in itself as some of the customers trade a few shares for new yachts and other goodies.

Q. I would appreciate your assistance on how to calculate interest on EE US Bonds. Included as part of my investment portfolio are Government EE US

Savings Bonds:

• 3 x $5,000 = $15,000 (cost) @ 6% ($30,000 Matured value), purchased in October, 1992 and;
• 3 x $5,000 = $15,000 (cost) @ 6% ($30,000 Matured Value) purchased in December, 1992

Assuming that these bonds would be held until maturity, how would I calculate, at any given time, the accumulated interest (straight, compounded, monthly, quarterly, annually, etc.) and the total current bond value as well as the approximate date of maturity? An illustration of the calculation would be most helpful.

---F.H., AOL.com

A. EE Bond interest computations regularly drive people crazy. I suggest an expert. One is Don Pederson in Detroit and his service, The Savings Bond Informer. He provides reports on Savings Bonds and their value for a fee of $15 to $45, depending on the number of bonds. You can contact him at: Box 09249, Detroit, MI 48209; or by telephone at: 800-927-1901.

Q. I have a question about student loans. Between the two of us, my husband and I have $30,000 in student loans. Currently my spouse is staying at home with our child. My annual income is about $32,000 a year. My question: how should I divide the pot of money left over at the end of the month ... pay extra on the student loans or into a retirement savings plan?

---M.R., Sacramento, CA

A. No easy answer. The burden of those loans will get in your way as long as you have them. The payments will be particularly irksome when you go to buy a house because they will reduce the amount you can borrow for the house.

I think you need to do both--- save for retirement and pay down the loans--- not one or the other. Start a retirement savings plan now, even if it is only 4 percent of your income. Put the remainder of what you can save toward the student loans. Then increase both payments as your income goes up.

The best solution for a loan burden that high, however, is to have a two earner household.

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File Name: 961028MODallas Morning News file date: openUniversal Press Syndicate file date: 10/28/96---MON

 © Dallas Morning News, Universal Press Syndicate, 1996