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About Medford mail tribune. (Medford, Or.) 1909-1989 | View Entire Issue (Jan. 29, 1959)
Pension Funds Investing In Stocks as Hedge on Inflation TJPI Financial Editor New York - (UPD - Pension funds are the fastest growing group among the institutional f-y " .f l n vestors, ac- cordlng to PnVmrt TilnvA y senior vice- s 4i . . I Spres ident of i rriMartin E-Se" X4,-1al&Co.The W - firm, acts as c o nsultant to welfare, health and pension pr o g rams. It seems as if every one wants a pension-but no ones seems to be worrying about an in flation that could cut the pen sion buying power down sharply when the pensioner begins to collect it years hence. . Tilove explains why the Dension funds are investing! more heavily in common KUner Waller stock, a factor that may be involved in thinking of the will-be pensioners: "Money invested in bonds -government or corporate -represents fixed dollar invest ments. You buy a $1,000 bond today and 20 years from now it will mature at .exactly 81.000-no more, no less-no matter how the price level ort-gays Tilove, their operations Nickerson fo Talk At Career Program Francis B. Nickerson, exec utive secretary of the Oregon state system of higher educa tion, will speak on career planning at the Jackson coun ty career program for parents and students at Medford High school Feb. 3. The program will start at 7:30 p.m. Seven guest speakers .will talk briefly about various ca reers, and participate in dis cussions of the subjects in rooms devoted to the subject area. Those attending will have an opportunity to meet two career speakers, according to Dr. Leonard B. Mayfield, sup erintendent of the Medford schools, who will welcome parents and students. Speakers, and the vocation al area include Dr. Eva Seen, Oregon state college, teaching; R. L. Richardson, Oregon State college, engineering; Dr. Bernd Craseman, University of Oregon, physical science; Dr. W. D. Richins, University of Oregon, business adminis tration; Frank Stanko, Oregon Technical institute, techni cians; Dr. Arthur Kreisman, Southern Oregon college, hu manities; and Miss Guhli Ol son, University of Oregon medical school, nursing. cost of living has changed. Hedge Against Inflation "On the other hand, com mon stocks, with some excep tions, tend to increase in mar ket value as prices go up. Consequently, common stocks are regarded as a hedge against inflation. "For pension funds the ap proach is this: if part of the assets of a fund are invested in common stocks,, then over a long period the value of the fund is likely to keep pace with the cost of living. "Ultimately, the reasoning goes the increase in value will either allow for neces sary impairments in pension benefits or the companies in volved will be able to mini mize any additional contribu tions that otherwise might be required of them." Tilove citea the recent sur vey of the Securities and Ex change Commission which re ported assets of pension funds at $19.3 billion. If funds of non-profit organizations are included the total exceeds $20 billion, he says. Reserves Increase And he notes further the SEC study estimated reserves of pension plans underwrit ten by insurance companies at more than $14 billion at the end of 1957. He notes that since 1951 the pension fund swing to common stocks has been sharp. Seven years ago, the average fund had 12 per cent of its assets in common stocks. At the end of 1958 this had risen to 25 per cent with common stock assets at book value at $4.8 billion. This figure of $4.8 billion has since grown to $6 billion market value because of the market's advance. Thus the percentage of common stock holdings can be placed at 32 per cent instead of 25. He indicates that pension fund investment in stocks has centered von the blue chips some 200 to 250 stocks. Penson funds are only one group of institutional inves tors. There are the mutual funds, banks, insurance com panies, universities and foun dations. Helped Bull Market These, it is explained, have played a big part in making the present bull market. And, have raised some big ques tions: -Have these purchases tend ed to increase the price of blue chip issues at a faster rate than the price of com mon stocks generally? -Have the purchases tended to put a floor under the price of blue chip stocks? -Have the heavy purchases of some stock issues by funds and other institutional inves tors tended to reduce the floating supply of these se curities? And has this result ed in making the stocks high ly sensitive to any changes in supply or demand? -Are self-insured pension funds by themselves, produc ing a major change in the behavior of the stock market. Wall Street has been dis cussing those very questions. Solutions may be forthcom ing through a trend toward more equity financing. Exams Announced For Civil Service Examinations for several civil service positions have been announced recently. Examination is now open for laborer, custodial, at the Veterans administration Do miciliary, Camp White, Enid Li. Brown, executive secretary for the board of civil service examiners at the Domiciliary, has announced. New examination for filling positions in several agencies have been announced for med ical officers. Apprenticeship and training representatives are being sought by the de partment of labor for filling positions throughout the country. Additional information may be obtained from Leonard Nelson at the Medford post office. Polaris Missile 'Downgraded' To Speed Development (Continued From Page 1) McElroy also jevealed that the Navy's Polaris missile has been "downgraded" somewhat in order to speed its develop ment. He said there has been "some sacrifice in range." Edwin Weisel, attorney for the subcommittee, said he had been told that the Polaris' range is now to be 800 to 1,000 miles instead of 1,500 miles as originally scheduled. McElroy -did not confirm the figures, saying they were classified. The defense secretary said, however, that the U.S. will have submarines "fully load ed" with Polaris missiles by the fall of 1960. He pointed out that the original operating date for Polaris was in 1963. Under further questioning McElroy conceded that Rus sia has an ICBM more power ful than any produced by the U.S. Atlas Has 'Adequate Thrust' He said this helps the Rus sians in outer space experi ments but not in missile strength, because the U.S. At las has "adequate thrust" to reach any target. McElroy , also insisted that the Polaris will have "ade ruate range to reach any tar get that would be assigned to it." He reported that five nuclear-powered Polaris subs are under construction. Cancellation of the Regulus II missile after $290 million had been spent on its devel opment, McElroy said, was due to the great superiority of the Polaris and the great acceleration in the Polaris program. At the outset of the hear ing, McElroy said in a pre pared statement that the Joint Chiefs of Staff have pledged in writing to support Presi dent Eisenhower's defense budget. He added that each of the service chiefs have "some reservations" about the amount provided. Unvarnished Account Johnson led off the hearing by asking for a "plain, un varnished and unadorned" ac count of the nation's prepar edness. Informed sources said Mc Elroy was primed to tell the group that U.S. intelligence estimates on Russian progress have been downgraded re cently while U.S. progress has exceeded expectations. That was not covered, however, in McElroy's short prepared statement. Johnson in his opening statement said the Senate group was "not interested in defense as an 'issue.' We want to know where we stand, and this is a question to which there should be a clear-cut an swer." ' KETCHUP MEANS STOP Memphis, Term. -(UPD- Bev erly Lyons says a woman she saw at a Memphis supermar ket gave hand signals for all turns and stops as she went around with her food cart. NEW DIMENSIONS Redwood City, Calif. -fDPD-Sign over a half -gallon jug of whiskey displayed in the win dow of a liquor store here: "ALASKA PINT formerly a Texas Fifth." MAIL TRIBUNE, Medford, Oregon, Thursday, January 29, 1S59 11 Rochester, N. Y. -(UPD-Mrs. Effie Cutting, a clerk at the Olmsted County courthouse here, decided to put the com bination of the safe in a se cure place. Officials were un able to open the safe the fol lowing day because Mrs. Cut ting had locked the combina tion inside it. 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Revolutionary Progress Stressed In Farm Message (Continued From Page 1) He stressed in his 1,500 word message to the House and Senate that revolutionary progress made in farm produc tion over the last 50 years make changes in the govern ment program essential. The President also announc ed a , new, but undefined, pro gram of surplus disposal over seas which he said would amount to "using food for peace." He did not spell out details, but said he is putting into motion an exploratory plan for cooperating with oth- Fiscal Officer Bill Discussed By Committee Salem - (UPD - Authorizing of a state fiscal officer im mediately was urged Wednes day by Rep. Keith Skelton, (D Sugene), cbchairman of the Joint Ways and Means com mittee. He appeared before the Senate State and Federal Affairs committee. The committee decided to table a bill offered by Sen. Ben Musa (D-The Dalles) but incorporate some amendments suggested by Musa into a bill introduced by Sen. Dan Thiel (D-Astoria). Thiel's bill was introduced at the request of the Interim committee on Government Reorganization. Skelton of fered some suggested amend ments transferring certain duties of the secretary of state's office to the fiscal of ficer and these too, will be incorporated in Thiel's bill. Meets Friday The committee meets Fri day and may pass the bill out at that time. Skelton said that with every passing day members of the Ways and Means com mittee were coming to realize that they do not have as much financial information as they would like in order to reduce budgets in the least amount of time possible. Skelton's contention that ignorance of finances had ex isted in past sessions was dis puted by Sen. Anthony Yturri (R-Ontario), minority leader in the Senate. Would Program Changes "There has been a director of finance who is charged spe cifically with going over state budgets and eliminating any 'fat' found in them," Yturri said. Sen. Harry Boivin (D-Klam-ath Falls) said he felt the big value of a fiscal officer would be to program changes in op eration of state departments between legislative sessions, changes which would reflect money savings in such depart ments. Secretary of state duties that would be transferred to the fiscal officer would be furnishing of legislative sup plies, storing of legislative documents and preparation of bills providing money for leg islative expenses. An oil tanker with a capac ity of 145,000 barrels of fuel oil carries the equivalent of 36,260 tons of coal. er friendly nations in getting the greatest possible use of farm surpluses in each. Stiff Opposition Certain His proposal was certain to run into stiff opposition in Congress, however. The big Democratic majority has re sisted administration efforts to lower farm price supports. Eisenhower said that by the start of the new fiscal year next July 1, the government would hold more than $9 bil lion in farm surpluses. He said the huge stock of government wheat was so large that if America -failed to harvest one bushel this year, the surplus supply was more than enough for domestic use, export sales, foreign donation and needed carryover for an entire year. "The price support and pro duction control, program has not worked," he said. The President pointed out that even though the government recovers some of its invest ment from surplus disposal the final cost of fixed price supports would be "impres sively large." Little To Help Farmers He objected to the present support program because most of the federal money in volved went to those storing the surpluses and to "relative ly few producers of a few crops." "It does little to help the farmers in greatest difficulty," he said. v Eisenhower's message, was in keeping with the adminis tration drive to balance the federal budget in the neigh borhood of $77 billion, partial ly by cutting federal expenses, and also, by getting more for the federal dollar. The message was accom panied by a memorandum from Secretary of Agriculture Ezra T. Benson outlining spe cific recommendations for a new program. Extension of Law These called for changes in the wheat, tobacco, and pea nut programs; extension of the surplus disposal law under which this country sells farm surpluses abroad for foreign currency; a three-year exten sion of the conservation re serve; expansion of agricul tural . research; participation of the states in programs to meet problems caused by drought and other natural dis asters; a change in the Rural Electrification Adimini stra tion program; changes in the Farmers Home Administra tion and . extension of the Sugar Act. HERTZ TRUCK RENTAL Available at HOPKINS RICHFIELD SERVICE McAndrews at Court Phone SP 3-9068 HURRY! HURRY! Ends Sal. 5:30 p.m. MB TAS EMT off ft SKI RIDICULOUS PRICES! RED TAG RIDICULOUS PRICES PRIEST 5-PC. fe ELECTRIC HAIR CUT SET REG. 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