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You are here: Home / News / From Wall Street to Campus Court: Weak economy may impact ACU community

From Wall Street to Campus Court: Weak economy may impact ACU community

October 10, 2008 by Michael Freeman

By Michael Freeman, Managing Editor

The U.S. stock market has ridden a roller coaster of ups and downs in the past year – from the record-high Dow Jones industrial average closing price of 14,198.10 last October to the 777-point drop Sept. 29, the worst single-day drop ever. The recent turmoil on Wall Street has not only been felt locally, but globally.

“The stock market primarily is struggling now because of fear,” said Terry Pope, professor of finance and associate dean of the College of Business Administration. “And what we’re experiencing is going on all over the world.”

The current market crisis was sparked by housing loans made to people who could not afford to pay off the loans. The federal government has tried to rectify the crisis with the passage of the $700 billion bailout Oct. 3, and is planning to loan money to struggling corporations and banks.

“It has certainly been a very difficult period with some unprecedented changes in the market,” said Jack Rich, senior vice president and chief investment officer. “There’s clearly a substantial amount of stress in the system right now, and nobody really understands how that will play out.”

ACU students could feel the results of a troubled market in a variety of ways, but family savings accounts and unemployment rates would be two of the most prominent effects, Pope said. The national unemployment rate is currently at 6.1 percent, up from 4.7 percent just one year ago, according to the Associated Press. For graduating students, this means it will be more difficult to find a job.

“There will be jobs out there; you will have to work harder to find them,” Pope said.

The ACU Endowment also may feel the effects of the stock market.

The endowment is comprised of funds the university has received over the years, which have been invested into a highly diversified portfolio.

“It impacts the value of the endowment,” Rich said. “But because of our diversification, generally when the market goes down, we don’t go down near as much, and we’re finding that’s the case right now.”

Last June, the university reported the endowment values having a 4.6 percent annual return despite the S&P 500 dropping 13.1 percent during the same period. However, Rich said he does not expect a similar outcome considering the poor national economic status, but many of the university’s managers report monthly or quarterly, so the university does not have current specific information on the endowment.

The price of oil also was affected, and gasoline prices dropped significantly. Thursday’s average price in Texas was $3.21, down from $3.50 last month, according to www.texasgasprices.com. As of Thursday afternoon, the cheapest price available in Abilene was $3.06.

“The prices in oil are coming down, so that’s a positive impact,” Rich said. “Instead of close to $4 a gallon, we’re probably going to be paying something under $3 in the next two or three months.”

While students can look forward to lower gas prices, they can also not worry about any reduction in student loans or employment on campus. Both should not be adversely affected, Pope said.

Despite the market’s status,this may be the time to look into investing, since stock prices are low, Pope said.

“If you have some money to invest, rather than run from it, you might look at it as a good buying opportunity,” Pope said. “It always has, always will, go through cycles. That’s the nature of free markets. At some point, it will start back up.”

Filed Under: News

Other News:

  • Provost adopts new policy for emeriti faculty

  • Demolition begins on Sherrod residential apartments

  • ACU Gives exceeds goal, raises over $919,000

About Michael Freeman

You are here: Home / News / From Wall Street to Campus Court: Weak economy may impact ACU community

Other News:

  • Provost adopts new policy for emeriti faculty

  • Demolition begins on Sherrod residential apartments

  • ACU Gives exceeds goal, raises over $919,000

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"Ending my college education early was always the plan for me, but the things that I have been able to see, experience and examine about ACU’s community were not. I have found immense growth in ACU over the past three and a half years, but ACU still has a long road to climb if it wants to keep catering to students as the world changes around them." To read more of this article visit acuoptimist.com or click the link in our bio. #acu #abilenechristianuniversity #privatechristianuniversity #collegestudentopinion #acuopinion ... See MoreSee Less

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