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UMveraty &eti SOTvive stock storm
By CLAY THORP
The UNC endowment seems to
have weathered the recent stock
"t think we came through in very
good shape," said Robert Eubanks,
chairman of the endowment board.
The board anticipated the crash
and pulled out some of their funds
from the stock market, Eubanks said.
Only 45 percent of the endowment
was in stocks, he added.
A large portion of the endowment
i was invested in bonds, which actually
went up in value, he said.
j At the market's close Tuesday, the
endowment total of $130 million was
down 10 percent, said Wayne Jones,
Wall Street closes early to cool
Dy MATT BIVENS
The New York Stock Exchange
took action Thursday to alleviate
erratic trading, while overseas
markets continued their downward
Wall Street announced it would
close early, at 2:30 p.m. on Friday,
Monday and Tuesday, to sort out
, huge amounts of paperwork created
by frenzied trading, said Fred
: Warren, branch manager of The First
Albany Corp., a brokerage firm.
Closing the market outright could
fuel panic, but simply closing early
gives stockholders trading freedom,
"No one is going to be shut out
of the market," he said. "It's not as
if we're opening it up for 10 minutes
and closing it down again. There is
plenty of time to trade."
The Securities and Exchange Com
mission (SEC) supported the
market's decision to close early, and
announced it would consider action
to make the market less volatile, said
Chiles Larson, deputy director of
From Associated Press reports
WASHINGTON Former tele
vision evangelist Pat Robertson's sale
of a computer system to a mystery
group of investors in Denver raised
questions Thursday about whether
his presidential campaign is making
an improper profit.
The transaction was arranged by
Clarence "Archie" Decker, a former
Colorado state senator and Denver
lawyer who also serves as Robertson's
regional political director, campaign -spokeswoman
Connie Snapp con- -firmed
in a news conference. - '
! She declined to disclose the names
of any investors involved in the
$337,500 computer sale from the
campaign, saying only that they were
"people not in politics." She charac
terized them as "people who are in
the business, interested in buying used
Federal Election Committee
spokesman Fred Eiland said he could
not answer questions about whether
such investors might be in violation
of the $1,000 limit on individual
contributions to a presidential cam
paign. He noted that the commission
in the past has permitted the sale of
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associate vice chancellor of finance
at UNC. With the resurge of the
market Wednesday, the endowment
losses were even lower.
"Overall, we were in a defensive
position because we had reduced our
stock percentage to 45 percent this
summer," he said.
Jones said that such a rapid market
plummet like the one on Monday
does not damage the endowment very
much because the University is more
concerned about long-term effects.
Also, the University invested in
good, strong companies, he added.
Endowment Board member Phil
Phillips said, "I think we will stand
the crash very well. Sure, (the
endowment) has been affected, but
public affairs at the SEC.
The market is too erratic to func
tion properly, largely as a result of
computer-programmed selling, said
Bob Marquis, vice president of
Kidder, Peabody and Co., a bro
"The conditions here (in the
market) are unreal," he said, and have
changed the way business is done "by
Warren said computer selling
discriminates against the average
investor who does not have computer
Although domestic markets began
showing signs of recovery, foreign
markets continued to decline. The
London Stock Exchange, Tokyo
Stock Exchange and markets in
Australia and Taiwan were among
several foreign exchanges closing
Since many capitalist economies
are interconnected, panic selling
spread from Wall Street across to
other exchanges, said Dennis Apple
yard, UNC professor of economics.
campaign assets or denied them,
depending on the circumstances.
Such rulings have held that a
campaign cannot sell equipment for
the purpose of raising revenue, nor
if the campaign intends to lease back
Snapp characterized the computer
sale as "a solid business transaction,"
and said that there was no improp
riety. She added, "There's nothing
illegal about it; it does not violate
FEC laws. It's a typical, normal
business procedure." ,
' She said the Robertson campaign
intends to purchase a new, larger
computer system. The one it is selling
was purchased for $233,480 at the
beginning of this year from another
Robertson associate, George Border
of Chesapeake, Va.
Robertson's report to the FEC last
week listed the sale price for the IBM
computer system at $337,500, which
Snapp said was a "conservative"
figure that might be increased mod
erately pending a formal appraisal.
She said the sale was not intended
to raise money, and the increase in
value was based on the fact that the
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we have a high quality portfolio."
Board member Julian Robertson
agreed. "As far as (the endowment)
was invested in common stocks, I'm
sure it was affected," he said.
While the value of the endowment
has varied, the income from invest
ments has probably remained the
same, UNC-system President CD.
"Obviously, the endowment value
must have declined," said Stanley
Black, chairman of UNC's depart
ment of economics.
Contributions to the University
also may have been affected, Black
said. It will be hard to detect whether
the crash will cause a decrease in
contributions because the change in
"Certainly the other markets look
to the New York Exchange," he said.
"Percentage-wise, our (the U.S.) drop
was among the largest in the world."
Many U.S. firms trade on other
exchanges, further integrating global
markets, said Richard McEnally, a
UNC business professor.
"If IBM (stock) is down here, they
(stockholders) will be pessimistic
abroad," he said.
The U.S. stock market is influ
enced in turn by stock markets and
economic policies of other nations,
The London Stock Exchange may
have influenced the Wall Street crash
Monday morning when it closed with
a loss, creating anxiety among some
U.S. stockholders, McEnally said.
Fears that German banks would
raise interest rates also factored into
the stock market losses, Appleyard
Higher interest rates would stunt
German economic growth, because
bank deposits would pay better than
investments in new enterprises. Ger
campaign had upgraded its system
and added to it with several personal
computers in its 24 state offices.
Robertson's financial statement
lists the purchaser as Computer
Futures Inc., which Snapp said was
a partnership of the unidentified
Hand Out All Your Cash Yet??
(books, tuition, deposits, rent, food, party goods, etc.)
the tax laws is already expected to
lower the number and size of con
tributions to education, he added.
Farris Womack, vice chancellor for
business and finance, said the Uni
versity's recent decision to divest
funds from companies directly tied
to South Africa had no effect on the
amount of UNC's stock losses.
Even if the University's stock
managers in New York have already
liquidated the funds, they have
reinvested them in other companies,
Womack said. The managers will
issue a report on the status of the
divested funds at the end of the
month, he said.
Assistant Business Editor Brian
Long contributed to this story.
many would import fewer goods as
a result, hurting the U.S. trade deficit,
U.S. investors would also deposit
money in German banks to take
advantage of high interest rates and
further aggravate the trade deficit,
In contrast to foreign markets, the
New York Stock Exchange requires
stricter attention to disclosure and
accounting, promoting more confi
dence in the U.S. system, McEnally
"Prices are less dependent on whim
and rumor, and more on solid
information," he said.
The SEC also provides more
thorough regulation than most of its
foreign counterparts can boast,
further enhancing confidence in the
New York exchange, McEnally said.
But SEC spokesperson Larson said
all stock exchanges regulate them
selves to a large degree, enforcing
rules of conduct and trade.
"This acts as a layer between the
regulating commissions and the
brokerage community," he said.
Colorado records show the firm
registered only as a name reserved for
future use by Decker, not an entity
that has incorporated at this point.
Snapp said she had no information
on the firm, and Decker refused to
comment on the deal. "I have no
statement at all," he said.
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With the recent flurry of activity
in global stock markets, followers
of the crisis have been flooded with
technical business terminology. To
aid in deciphering the stock
market stories, here is a quick
reference guide to Wall Street
B arbitrage The purchase of
securities on one market for
immediate resale on another to
profit from a price discrepancy.
B bear market A period in
which stock prices continually
B blue chip stock A stock
that sells at a high price because
of public confidence in its long
record of steady earnings. (For
example, IBM, General Motors
B bonds A certificate of debt
issued by a government or corpo
ration, guaranteeing payment of
the original investment plus inter
est by a specified future date.
B bull market A period in
which stock prices continually rise.
B common stock Ordinary
capital shares of a corporation that
have exclusive residual claim on
the net assets and net income of
the corporation after all prior
claims have been paid.
B dividend A share of profits
received by a stockholder.
B earnings per share The
figure obtained by dividing the
number of outstanding shares of
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common stock into the amount
left after dividends have been paid
on any preferred stock.
B inflation An abnormal
increase in available currency and
credit beyond the proportion of
available goods, resulting in a
sharp and continuing rise in price
B liquidity The condition of
having sufficient cash or liquid
assets to pay debts or assume
B preferred stock The por
tion of a corporation's stock
having a priority or preference
over the common stock in the
distribution of dividends and
B prime rate The lowest rate
of interest on bank loans at any
given time and place, offered to
B recession A moderate and
temporary decline in economic
activity that occurs during a period
of otherwise increasing prosperity.
B SEC Securities and
Exchange Commission, a govern
ment agency which regulates the
B stocks The capital or fund
that a corporation raises through
the sale of shares entitling the
holder to dividends and other
rights of ownership.
B yield The profit obtained
from an investment; a return.
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