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Stock market plunge hits Taber Trust Fund

by Tom Chillemi

The uncertain economic times have contributed to a 30 percent drop in Urbanna’s Taber Trust Fund this year, financial advisor Garry Clay told the Urbanna Town Council at its work session on Friday, October 10.

When the town placed the Taber Trust with the American Fund in April 2006, it was worth $1,075,000.

As of October 9, 2008, the Taber Trust’s value had shrunk to $866,300—a drop of 19 percent since it was placed with the American Fund.

The good news is that the investments are still returning a 5 percent dividend, said Clay, who compared that dividend to a 10-year Treasury Bill that is currently paying 4.5 percent.

In addition, the number of shares has increased from 17,900 to 20,400 because the town reinvested some dividends and capital gains into additional shares.

As of December 31, 2007, the Taber Trust was worth $1,282,451; plus the town withdrew $130,125 in cash during the 20-month period prior to that date, Clay told council at its February meeting.

Last week, Clay said that 91 percent of all funds are down in 2008.

He called the current market “unprecedented . . . there has absolutely been no place to hide.”

Urbanna is invested in companies “with good cash flow” like Chevron, Verizon and GE, said Clay. “These companies are not going to go away.”

He also pointed out that, historically, the stock market rebounds after dropping. “I don’t think this is going to recover overnight,” said Clay, who added a recovery could take two to three years or as many as 10 years. “In the meantime you are receiving dividends.”

Clay said that in a recovery, a balanced portfolio, such as the town has, will do better than a growth fund.

Council did not direct Clay to change any specific investments. “I think we ought to stay right where we are,” said council member Bill Thrift.

Town administrator Lewis Filling told council that Clay has been responsive to council’s questions and concerns.

posted 10.16.2008

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