http://www.thepost.minclspring.com
Cljarlotte
THURSDAY, DECEMBER 18, 1997
8A
STRICTLY BUSINESS
CHARLES ROSS
Your
Personal
Finance
Indexes
measure
economy
The Consumer Price Index or
■CPI is an economic statistic
•which measures the average
change in prices paid by con
sumers for goods and services
like food, clothing, shelter, and
transportation. The increase in
the CPI is what most people refer
lo as the inflation rate. A 5 per-
;cent increase in the CPI means
that inflation will increase 5 per
cent. The CPI is criticized as
being an unrealistic measure of
what the average household
spends, but the CPI remains
very influential.
Why is the CPI important?
For starters, the inflation rate is
what employers use to set salary
increases. In addition, manufac
turers and retailers use it to set
future price increases and the
government pegs cost-of-living
increases for Social Security
recipients to the inflation rate.
The unemployment rate
The unemployment rate helps
to signal good or bad times and
represents the number of people
who are out of a job. The number
is expressed as a percentage. So
for example, if the unemploy
ment rate is 10 percent and the
number of people in the work
force is 50,000, then that means
5,000 people are unemployed.
But the numbers don’t tell the
whole story.
The unemployment rate does
not measure people who have
stopped looking for work, but it
does count people who only
worked one hour in a week. For
this reason the unemployment
rate is not as accurate as it could
be, which means the unemploy
ment rate is generally several
percentage points higher than
reported.
Low unemployment numbers
may signal a good time to sell a
home or start a business. High
unemployment may mean your
own job security could be at risk.
Gross Domestic Product
Just as the Consumer Price
Index measures retail prices, the
Producer Price Index or PPI
measures changes in wholesale
prices that retailers have to pay
for the products that they sell.
The PPI provides a clue to the
future price consumers will have
to pay. When producers receive
higher prices from retailers for
their products, it’s likely that
those increases will be passed on
to consumers. A m^jor increase
in the PPI may indicate its time
to stock up on items or buy a new
car this year instead of next.
The Gross Domestic Product
or GDP is a measure of the total
value of all finished goods and
services produced within the
United States. ’The GDP is per
haps the most important barom
eter of our nation’s health. A ris
ing GDP points to a strong and
expanding economy. A failing
GDP means overall economic
weakness.
leading Economic Indicators
Economists use the index of
leading economic indicators to
predict where the economy is
headed. The index consists of 11
items, including initial claims for
unemployment insurance, new
orders placed to manufacturers,
residential building permits,
money supply and the length of
the average work week. ’The
index is considered to be a pre
dictor of what will happen in the
economy six to nine months in
the future and is worth examin
ing before you make any m^r
career or financial moves.
Another economic term, the
See INDEXES on page 9A
‘Tis the Season ...
The holidays are a time for giving to charity and the Charitable Gift Fund
reports that during the year education is number one among its donors.
Community
Foundations
Arts,
Culture^
Humanities
Health
Public/
Society
Benefit
1.8%
Fidelity Distributors Corporation,
82 Devonshire Street, feston MA 02109
BET Holdings chief prepares to
conquer more than television ratings
By Peter Perl
THE WASHINTON POST
On the 44th floor of New York’s
World Trade Center last May, in a
posh conference room overlooking
the Hudson River, Robert L.
Johnson stood and delivered the
BET pitch.
Seated at rows of banquet tables
before him, some 80 Wall Street
stock analysts already knew
Johnson as the founder of Black
Entertainment Television and
BET Holdings Inc., the first and
largest black-owned firm to be
traded on the New York Stock
Exchange. But he was here to sell
a new and dazzling vision of BET
- not merely as America’s original
black cable 'TV network, now
reaching 52 million homes, but
rather as a rapidly growing media
conglomerate worthy of expand
ing investment into the next cen
tury.
He had a soft-spoken yet com
manding presence as he rattled
off a long list of new ventures in
television, publishing and leisure
activities that would position
Washington-based BET to
become the dominant multimedia
“entertainment brand” for African
Americans and people of color all
over the world - essentially, the
black Disney.
Johnson told the analysts that
bet's basic cable network
remained so lucrative that he
would have about $300 million in
cash, with virtually no debt, to
invest in new businesses. With
that, he emphasized, BET
planned not just to dominate, but
to monopolize the field.
“Our goal is not to see another
black programming service exist,”
he said. “So, if DirecTV is created,
we are on Direc’TV. If Primestar is
created, we are on Primestar. If
EchoStar or any other distribu
tion platform is created, we rush
to get in, not only with our core
BET channel, but with our
flanker-brand channels of jazz,
movies or pay-per-view. 'The same
with the Internet. . . We have an
exclusive contract with Microsoft
to be their sole provider of African
American content on the Internet.
So we are going to brand the
Internet, much the way we brand
ed cable some 16 years ago...
“There has not been, in my opin
ion, a black brand of any signifi
cance that has penetrated the
psyche of black America, probably
since Motown, other than BE'T.
And, of course, Motown went on
to become a universal brand.”
Smart, charming, politically
astute and intensely ambitious.
Bob Johnson has defined Black
Entertainment Tfelevision as the
exclusive purveyor of African
American-oriented entertain
ment on cable. With $500,000
Money Management
Robert
Johnson
hopes to
turn BET
into a global
media player
with TV and
financial ser
vices.
seed money from one cable giant
and $10 million more invested by
other industry players, he has
built BET in less than 20 years
into a company whose worth
approaches $1 billion. And if he
achieves the ambition he outlined
to the Wall Street analysts, he
will extend BETs reach much
further into African American life:
’Television viewers will watch
not just BET, but also BET on
Jazz, a music-video channel;
BETs Action Pay-Per-View, fea
turing urban-oriented films; and
BET Movies/STARZ!3, another
movie channel. Readers will pore
over BET Weekend, a monthly
Sunday newspaper insert, along
with BETs monthly magazine.
Emerge. Shoppers will order from
a BET line of clothing, and pay
with BET Visa cards from BET
Financial Services. Diners will
flock to a BET on Jazz restaurant
in downtown Washington, and to
BET Soundstage, a music-video-
themed restaurant whose pro-
See BET on page 9A
New government
rules give American
consumers credit
By Amanda Danchi
SPECIAL TO THE POST
Your credit report contains
important information about you
- information that can help you
land a job or get approved for a
mortgage. Last year, in an effort
to continually improve credit
reporting accuracy. Congress
enacted the Consumer Credit
Reporting Reform Act, which took
effect in October. According to the
N.C. Association of CPAs, the new
act strengthens the older Fair
Credit Reporting Act and includes
several new provisions. While the
act is designed to improve the
way credit information is han
dled; it’s important that you’re
aware of your responsibilities
with regard to your credit report
Role of reporting agencies
What many people don’t realize
is that a credit bureau is simply
an information gathering busi
ness. The three major credit
reporting agencies input the com
puterized information they
receive fium lenders and mer
chants describing consumers out
standing balances and payment
history. 'These agencies also
search public information records
at courthouses throughout the
country for information concem-
ingjudgments, liens, foreclosures,
and bankruptcies. Credit report
ing agencies do not assign ratings,
nor do they deny credit. It is the
lender who decides whether a
consumer is creditworthy, based
on the information it receives and
on its own credit criteria.
When, why you should review
Review your credit file every few
years to make certain the infor
mation it contains is accurate and
complete. Most errors occur in
files of family members with the
same last name and address and
in those of people with common
names. MisspeUings and incor
rect Social Security numbers add
problems as well. Make it a point
to check your credit report in
advance of applying for a mort
gage or other major loan. That
way you can correct any errors
and avoid delays in the processing
of your loan request.
Tb obtain a copy of your credit
See CREDIT on page 9A
Look to the past in order
to get jump on investing
in present and future
OMAR DILLARD
Financial
mi' -4
Focus
Making profits in the stock market
these days is as easy as learning to
tie your shoe. Keeping them, on
the other hand, might not be so
simple.
When it comes to mutual funds, a
bull market can make a hero out of
the most mediocre money manag
er. But what will happen when
things cool off — or worse, get
downright cold? Tb help you identify financial captains who know how
to sail through rough waters, take a look at down markets fi'om the
past.
Let’s look at how one of the biggest mutual fimd groups has done in
the past. Three market declines occurred between January 1973 and
October 1990. 'The first began Jan. 11, 1973, and ended Oct. 3,1974.
Three of the four funds in this group that existed at that time did bet
ter than the stock market.
In the 1970s, five equity funds were added to the group. When the
stock market suffered its second major decline of the test period,
between Nov. 28,1980 and Aug. 12, 1982, all nine of the group’s equi
ty funds performed better than-the stock market.
By Aug. 25, 1987, the beginning of the third decline, this fimd-com-
pany managed 12 equity funds. On Dec. 4, 1987; when the decline
ended, all 12 fimds had outperformed the stock market.
Take these three major market declines, and ask your broker to com
pare the results of your favorite family to the unmanaged Standard &
Poor’s 500 Index or any other major index.
Of course, this test is not infallible, nor will it guarantee you protec
tion against future decline. It does, however, tell you how well a fund's
managers have protected their shareholders in past major market
declines, and past results are the only way we have to study fund
management.
Not all mutual fimds perform the same in good and bad markets. It
would make sense, however, that a managed portfolio of common
stocks should perform better than an unmanaged index. Otherwise,
why hire a mansiger?
Good money managers strive to invest in solid companies that they
would be comfortable owning for many years, through good and bad
times. Part of this process is paying attention to the price of a securi
ty in relation to its value. Owning stocks of good value at reasonable
prices takes the emotion out of investing. It’s also the best protection
against a falling market.
Any money manager can look good in a bull market. Solid money
management, however, is measured by the ability to make money in
good markets and to keep it in bad markets.
OMAR DILLARD is an investment counselor at Edward Jones
investments in Charlotte.
Black-held companies had a banner year in 1997
By John William Templeton
NATIONAL NEWSPAPER
PUBUSHERS ASSOCIATION
SAN FRANCISCO - A 24 per
cent gain in the Black Stock
Worldwide index since May 1
underscores the most significant
year for African American and
African companies in the world's
equity markets ever.
Shareholders of Black
Entertainment Television
(BTVJ^YSE) and Carver Federal
Savings Bank of Harlem
(CNYrOTC) are making joyful
noises as 1997 comes to a close.
Founder Bob Johnson’s decision
to buy back the outstanding
shares of BTV doubled the share
value fri)m 28 7/8 to 56 at the end
of November. 'The U.S.’s largest
Black bank. Carver, did even bet
ter in percentage terms, making
a Lazarus-like move from 2 7/8 to
17.
Ariel Mutual Funds two prima
ry investment vehicles, Ariel
Growth (ARGFX) and Ariel
Capital Appreciation (CAAPX)
nearly tripled during 1997, mov
ing from a trading range around
$14 respectively to end of
November, closing at $40.95 and
$35.58.
In April, Ariel released the first
study of African-American
investment attitudes, projecting
that $36 billion of investible
assets were drawing little or no
appreciation due to lack of
awareness in the markets.
The strong performance of their
funds and identifiable companies
like BTV and Carver is a power
ful incentive to change those atti
tudes.
Significantly, the African-
American and African public
companies traded on U.S.
exchanges as a group performed
in a coimter-cyclical fashion.
’They continued to rise when the
rest of the market went through a
correction.
On the African continent, com
modify prices are having a more
profound impact on share prices,
particularly the price of gold.
Africa’s new bUlion-doUar con
glomerates are taking advantage
of the opportunity to go on a buy
ing spree.
JCI and New Africa
Investments (JCI.J) and
(NAIL.J) have purchased the
British conglomerate Lonrho,
See BLACK on page 9A