European Stars And Stripes (Newspaper) - September 7, 1986, Darmstadt, Hesse                                Sunday september 7, 1986 the stars and stripes Page 19 investor s guide by William a. Doyle q. I own 100 shares of cumulative preferred Stock in a very Fine company and am considering buy ing 100 shares of cumulative preference Stock a different Issue of the same company. What Are the advantages and disadvantages of preferred and prefer ence stocks also please explain cd  a. There s no real differ ence Between preferred an preference stocks. The two words mean the Doyle same thing stocks that Are senior to common Stock of the same company. Dividends must be paid on preferred and preference stocks before the company can pay dividends on it common Stock. The cumulative designation Means that if the company alls on hard times and omits dividends on its preferred and or prefer ence stocks those dividends must remade up before any dividends Are paid on the common Stock. If the company is liquidated the preferred and preference stocks Mustbe paid Oft at a stated Par value or an amount set at the time those stocks were issued before any pay ment is made to common Stockhold ers. Most preferred and preference stocks pay dividends at fixed Rales which never change. The exceptions Are participating preferred on which dividends can be raised when company profits increase and Varia ble rate preferred on which dividends Rise or All in line with interest rates in the marketplace. Typically preferred and preference stocks have higher current yields annual dividends divided by mar Ket Price than common stocks. All of the above Are advantage that make preferred and preference stocks attractive to people seeking in come investments with relative safety. The big disadvantage is that the dividends on most preferred and preference stocks never change. A company can and usually does in crease dividend payments on its common stocks when earnings  so with preferred and preference issues. As a result preferred and preference stocks Don t have potential for growth in value. Nor do they provide Protection against inflation. Q. Last fall while interest rates were still relatively High i bought900 shares of Utility company preferred Stock at a yield of 12.75 per cent. Despite the fact that interest rates have come Down the Market Price of my Stock has t risen. The Utility has other preferred stocks All of which have gone up in mar Ket value. Why should this one preferred Stock be so under valued a. Most Likely because the preferred Stock you own has a Call feature giving the company the right to Call Ltd and pay it off at or near the Price at which it is trading. Ait note investors naturally won pay More for it than the Price at which it might be redeemed. Now that interest rates have come Down Many companies Nave called in preferred and Bonds Orare planning to do so As soon As the Call features allow. Doytt a comm or Talon que uni. But he Cin proved an Iwert Only through of column c King of turn syn Diou inc. Business news some experts say Economy heading toward a recession Washington a while the Reagan administration and the most optimistic private economists say the United states is about to shake off two years of business stagnation others Sec it differently. Some of the economists who stud each curvature of the business Cycle Are starting to whisper recession the dreaded word that spells downturn. The most pessimistic among this set of doubting economists actually have started to include a recession in their forecasts and a relentless siring of poor economic news bolsters their , while not going that far do say the country is skating perilously close to recession. Production at the nation s factories has fallen for three straight months something that has t happened since the Depths of the 1981-82 recession. The country s Trade deficit which the administration expected would be improving by now because of a Steep fall inthe value of the Dollar against foreign currencies is getting worse. The buy and sell Ledger hit a record $18 billion deficit in july. The Gross National product the broadest measure of . Economic health grew at an annual rate of just 0.6 percent in the april june Quarter indicating the Economy was at a near standstill. That represented the weakest growth since the end of the last recession in late 1982. The news has not been All bad however. Consumer prices which had been soaring at double digit rates just a few years ago actually fell at an annual Rati of 0.2 percent in the first seven month of this year the Best inflation performance in 37 years. But Many economists Are becoming concerned that the problem plagued parts of the Economy manufacturing agriculture Energy Are beginning to contaminate the stronger sectors. In particular they Are worried that consumer spending which accounts for two thirds of economic growth could begin to falter in coming months because of rising unemployment and a record High level of consumer debt. The present recovery in its 46thmonth, is considered Well into advanced old age As recoveries go. It already is the second longest expansion since the end of world War ii. And is Well past the 33-month average length for recoveries from periods of business downturns. Beryl Sprinkel president Reagan Schief economics adviser argues that recoveries die not from old age but fro bad economic policy decisions. But other economists worry that with business growth so slow some unforeseen Shock could be enough to Start another recession. Economists generally define the Busi Ness Cycle As being in a state of recession when there have been two consecutive quarters of decline in the Gnu. Robert j. Eggert editor of Blue Chip economic indicators a financial news letter said four of the 52 economists he surveys each month arc now forecasting recession. Two months ago. Only one analyst offered that prediction. A. George Gols vice president for economics at Arthur d. Little inc. A Cam Bridge mass., consulting firm is one of those who believes a recession will Start next year. My Basic premise is that the unite states right now is highly vulnerable be cause of the record High Federal budget deficit the record High Trade deficit the unprecedented level of consumer debt and the High debt situation of the less developed countries he said. It is no going to take much to imbalance the Situ  Gols says there s a 75 percent Chanc that a recession will occur next year. John k. Langum head of business economics inc., a Chicago consulting firm said he believes the country is Al ready in a recession. These views Are at Sharp Odds with the assessments Given by administration economists. In mid August the administration issued a revised economic fore cast calling for the Economy to rebound to a growth rate of 4 percent or higher for the rest of this year and All of 1987. Sprinkel briefing reporters recently argued that none of the traditional warn ing signals of a recession such As rising inflation or growing business inventories arc present. Stocks zoom then end week mixed new York up the Stock mar Ket reached record Heights last week but its Overall performance was mixed. Though trading was heavy and Vola tile the Dow Jones Industrial average ended with a meager Gam of 1.41 Points and losing issues outnumbered winners. The Dow Jones Industrial average plunged 28 Points tuesday the Day after labor Day. Selling evaporated wednes Day and in late trading the Dow climbed nearly 11  Market made its most dramatic move thursday As Hopes for an improve Economy arbitrage buy programs and a stronger Oil sector drove the Market up. The Dow climbed 38.38 Points to anal time closing High of 1919.71. The old record was 1909.03, set july 2. Theyse composite Index and the Stan Dard is poor s 500-Stock Index also finished at new  Dow reversed itself Friday falling nearly 20 Points to end just below the 1900 Mark at 1899.75. On the trading floor Occidental Petroleum was the most Active nose Lis cd Issue adding v4 to 30. At to followed edging up a to 24v4. Owens coming fiberglas was third adding i to 19v. Oil issues were prominent on the Liston actively traded issues advancing As Money managers encouraged by higher crude Oil prices expanded their holdings of the group. Mobil climbed to i to 38  Petroleum Rose 7 to 11 i. Exxon added l i to 70%. Chevron jumped 2vtto 47. Atlantic Richfield spurted vhf to 61 and Schlumberger Rose i to 34 , the Parent of Marathon Oil climbed in. To 20vi. Hershey foods fell 8vi to 77v4. Pc inter National lost 5 a to 63. Coca cola dropped 2% to 36v and Pepsi fizzled 3 a to 28 a. Squibb lost 4v to 111%. Schering ploughs id 5 a to 80 /4. Syntax dropped 5s to 65 /4 Stock pulse by Munrud Gnu i c 19m Friday 8puml 4� 51988 nose Compoli Moil acini by volume King Irv vol Clow eat be Vuk 2.618.100 14014 110.53 130 3.1 2.480.100 30 1.94 150 8.3 mi6.700 38 3.26 12.0 5.7 find Lei 1.865.800 32% 1.24 25.0 0.51.854.900 20% 1.08 190 5.8 1.799.800 28% i 58 180 2.3 1.712.900 26% 1.50 18.0 4.3 1.697.300 58k 4.02 14.0 20 1.600.000 40 /. 1 62 250 08 1.577.700 44m 2.50 160  Cox Cha earn. Be Dkl 262k 4% 9 88 27.0 0.1 138% 4 � 6.13 230 0.3 146% -4% 11.33 13.0 4.8 112% 3k 426 26.0 2.3 65v 3% 329 20.0 2.4 110% 3% 4.28 280 20 65k 3� 2.12 31.0 1.3 75 3 507 150 3.5 holidy Cna 95 � 3 ame comp Oille Moil Acu Vei by volumes lock div vol cum Eam be Dkl Puchero 652.800 22%vackel 652.500 5 030 17.0 Bat 397.800 65-16 066 100 30texilair 382�00 31% Homes nop 302.600 120alronspeu 280.800 14% eco Bart 269.100 21x 06wanglb 268.600 14% 035 420 1.1 Hutto i 250.600 26% 1.77 150 0.3 Hon third 237.300 13% Amei com polite Law Ami Nel Chenge Eskue Choe Earni be old 120 9% 36% 6% Lockhorn Estop he shop " 1v� 2%10 2 n 2 49% 1% 100 � 1% 15% 1%hovmnlin be Price to Oeming ratio old dividend yield Del deficit in yield Hillock be Mongi  12 month Une dulled 1 90 1001.15 9.0 3.06 25 o o 9 8.78 60 7.41 130 165 1 31 12.0 and Merck fell 5% 10 1 to i Upjohn was a exception climbing 7 to 93 a after Kidder Peabody recommended it among Blue chips ism advanced 1ftto 140%. General electric slipped l i to 77 a and Sears Slid % to 44 a. Allied stores rang up one of the week biggest gains climbing 9 / to 112 follow ing a takeover offer from the Campea corp. Of Toronto. Allied said it would consider the bid. Overall 1,019 issues posted losses while 926 showed gains among a total of 2,181 issues traded. The interest rat sensitive Dow Utility Index fell 5.44 to 213.71. The Dow transportation average jumped 5.50 to 777.50. Standard & poor s 500-Stock Index slipped 2146 to 250.47. The new York Stock Exchange composite Index cased l.43to 143.89. Prices were mixed in moderate trading on the american Stock Exchange. Fund assets show decline new York up assets of Money Market Mutual funds fell $95.2 million to $233.24 billion in the latest week the Washington based investment company Institute reported. Two of the three categories however showed increases assets of institutional funds Rose $192.8 million to$68.03 billion and assets of general purpose funds Rose $282.3 million to $63.02 billion. Assets of broker dealer funds fell $570.3 million to $102.19 billion. The Donoghue organization of Holliston mass., said the average seven Day yield son Money Market funds fell last week to 5.53 percent from 5.67, and 30-Davyields declined to 5.72 percent from 5.79 percent