Net Noir Chat
For your review, we have included a transcript of an on-line chat we hosted with NetNoir.
Mr. Cunningham: Hello everyone. How are you guys tonight?
NetNoir: Mr. Cunningham, tell us who you are and what you do.
Mr. Cunningham: I'm William Cunningham from creativeinvest.com. I'm a socially responsible investment advisor specializing in stocks and bonds of companies owned by women and minorities. I also specialize in general market analysis and more information can be found at the creativeinvest.com website. And that's it. :o)
Question: Mr. Cunningham, should we be anxious about investing in these unstable times? Why or why not?
Mr. Cunningham: In a word, Yes. These types of markets require patience and thought. One must carefully evaluate where they are along the investment life cycle. That is, if you are close to retirement, I would pull out of the stock market now. If, on the other hand, you have ten or twenty years to go until you retire, I would stay invested. I might reduce my exposure to the stock market over the short term by buying CDs or treasury securities, but I would stay invested in the equity market.
Question: If you're invested in a 401k should you pullout now?
Mr. Cunningham: Again, it depends upon how close to retirement you are. If you are within two years of retirement, then I would seriously consider pulling out. If, however, you have a longer time to go until you retire, then I would stay invested.
Question: William, aren't most stocks too expensive at the moment? Isn't a downturn due?
Mr. Cunningham: On the stock question, it depends. It depends upon the company that you're buying, the prospects for the industry that they are in and again, where you are along the investment life cycle. I'm sure Xerox looked expensive in 1969.
Question: What about the new I-Bonds ( Inflation adjusted bonds)?
Mr. Cunningham: Inflation adjusted bonds are a good buy, in my opinion, for investors who have a large enough investment portfolio that they need to protect a core position and make sure that returns on their investments are safe and beat inflation.
Question: Bill, what industrial or service sectors do you like?
Mr. Cunningham: I like utilities, I like Washington Gas Light. Utilities are safe and sound. They are also interest sensitive and safe and sound equity investments with interest rates declining, they should continue to do well. I also like Internet stocks. I know that's a risky proposition for most investors, but I like a portfolio on the equity side that is comprised of very safe equity positions like utilities combined with somewhat more risky positions in some of the Internet companies. Companies like America Online, Netscape and others. In this way, I believe that you can have the best of both worlds. I still believe that the Internet stocks have a great deal of upside potential mainly because no one has still figured out how to value these companies, and the utilities I continue to like because everybody has a gas bill or an electric bill and regardless of whether the stock market goes up 200 points or down 200 points, people will continue to pay their electric bill.
Question: If you had a small amount of money (two thousand dollars), how would you invest it?
Mr. Cunningham: I would invest in a mutual fund preferably a no load fund and I would try to pick a socially responsible mutual fund. On the equity side, the IPS Millennium Fund has only $18.5 Million in assets but year to date they are up 22%. They are a no load fund.
Question: What do you mean by socially responsible fund?
Mr. Cunningham: I mean a fund that considers the social impact of the business activities of the companies that the fund invests in. For example, a socially responsible fund would probably not purchase tobacco company stock.
Question: At what age did you begin investing?
Mr. Cunningham: My first job while I was still in high school was working for a credit union that catered to low income people. This credit union was located on Martin Luther King, Jr. Ave. in Washington, DC. I learned about banking and finance there. So, I guess you could say I started my investment career while I was still in high school.
Question: If you borrow from your companies stock fund retirement plan...would you repay it now or discontinue it then start over at a later date?
Mr. Cunningham: Okay, you borrowed money from your company's retirement plan, and you want to know if you should repay that loan now or continue to finance the loan. Is that correct? I would say that of course, it depends upon the interest rate for the loan. I would tend to be in favor of repaying the loan now!!! But, again you'll want to evaluate the cost of the loan versus alternative sources of money. If you are able to borrow at a rate of, let's say 1%, then don't bother repaying now, continue to finance. On the other hand, if the interest rate on the loan is 15% ... pay that bad boy off now.
NetNoir: Bill, give us your web site address again and phone numbers.
Mr. Cunningham: www.creativeinvest.com. 866-867-3795
Question: What if you have held stocks in Asia and now they've lost value. Should you just hold on for another decade if you can wait? Or get it all out now?
Mr. Cunningham: Ooooo .. a tough one. It, of course depends. My initial reaction would be to try to hold on, but it depends on the size of the position, the country in which you are invested, how close you are to needing those funds, and your tolerance for risk. Oh ... and one last thing: It depends on how strong a stomach you have.
Question: Bill, what about those bond and money market funds?
Mr. Cunningham: I like bond and money market funds. On the fixed income side (bond) I like Parnassus Fixed Income a no load fund that to date has returned 4.48%. I also like some of the utility bond funds. On the money market fund side, I like Citizens Working Assets Money Fund which has returned 3.45% so far this year.
Question: I can wait 15 years before retirement, and it seems that there isn't any other place to invest right now or is there that would be a likely high rate of return in the long run?
Mr. Cunningham: To quote Ed McMahon, "you are correct sir". The stock market has proven to be one of the highest yielding investment environments over the course of the last 50 or 75 or 100 years. Certainly you're better off investing in a portfolio of carefully selected equity securities or in an equity mutual fund than you are keeping all of your money in a CD at the bank.
Question: Isn't the stock market going to jump next week when rates are cut?
Mr. Cunningham: LOL One never knows. I've been saying that the stock market was going to go up dramatically ever since we had that 500+ point drop in August. I thought the drop was due to the fact that all of the adults were on vacation. I was wrong. This is a fundamental shift in the investment environment and you should behave accordingly. I believe caution is the watch word today.
Question: Do you think it could reach 9300 this year as Abby Joseph Cohen does?
Mr. Cunningham: Ms. Cohen works for Goldman Sachs a firm which is in the position to take the market to 9300 if they really wanted to. :o) I doubt we'll reach such lofty levels before December 31, 1998. Keep in mind that I am mainly a fixed income "bond" market specialist.
Question: Warren Buffett says he has $9 Billion handy ready to invest when the real drop comes.
Mr. Cunningham: Good for Warren. I would not be surprised. I keep on my wall a set of quotes from Mr. Buffet. Let me share one of these with you. ... "The first rule is not to lose. The second rule is not to forget the first rule." Also, "it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
NetNoir: Our guest is also a specialist on black owned banks. How are they doing? Carver, a savings and loans, is publicly traded. Is it worth a look?
Mr. Cunningham: Carver is a black owned bank operating is Harlem, New York City. They are also one of the companies that we track. Carver Bancorp has a symbol CNY. They closed today at 9 1/8 up 1/4 point on volume of 30,000 shares. We think Carver is a company to watch. Their stock following the trend in the financial services sector has been badly bruised. In addition, we're pretty critical of Carver for not making more money given the opportunities that exist for economic development in Harlem. We also received quite a few e-mail messages from minority business people in New York City and in Harlem who have not been that impressed with the reception they have received at Carver. Still, we are optimistic and think that eventually Carver will realize its true potential, both as an engine for Black economic development and as a standard stand alone financial institution. If you are really interested, e-mail me at email@example.com and let's talk about it.
Question: Are there black owned banks in NY?
NetNoir: There are no-repeat-no black owned commercial banks in New York state.
Mr. Cunningham: That is correct. Carver is a savings and loan, so technically it is not a bank.
Question: Are any other black financial firms, any where, publicly- traded?
Mr. Cunningham: Yes. Broadway Financial, symbol BYFC, closed today at 8 3/4 points. Broadway Financial owns Broadway Federal Savings and Loan, a Black owned S&L located in Los Angeles, California. Several other Black owned banks and thrifts have publically traded stock. Several other Black owned financial institutions have stock that is traded by appointment only, so there are investment opportunities in this sector.
NetNoir: William, give us your final thoughts and web address.
Mr. Cunningham: Let's start with the web address which is www.creativeinvest.com.
FINAL THOUGHTS: I think there are growing opportunities for African American investors to make money in these volatile markets. Certainly some equity positions are attractive. One has to be careful and do their homework and pay attention. I also think that there are a growing number of opportunities for African Americans to invest in African American owned companies. Again, you must do your homework, be patient, and not be too greedy. That's it. :o)
NetNoir: Thanks, William for all your sage advice.
Mr. Cunningham: Thank you and good night. ::::::Waving:::::::
Chat dated 9/24/98.