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Pension Fund Suffers Loss Due to Drop in WorldCom's Stock Price
Aired June 28, 2002 - 12:22 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Now, as promised, more talk about WorldCom. The nation's second largest pension fund out of New York state has suffered its single worst investment loss ever, roughly $300 million, because of WorldCom. WorldCom stock sank to pennies a share before Nasdaq shelled it. And you might own some, and you may not even know it. Miles O'Brien joins us from the Big Board with a look at WorldCom's unhappy, in some cases unwitting owners now.
MILES O'BRIEN, CNN CORRESPONDENT: Fredricka, the headlines say "World Con," and that's going to make a lot of people unhappy who have the WorldCom stock, but what if you have mutual funds? We're going to talk about that in just a second.
But I wanted to throw up some statistics for you, just to give you a sense of what WorldCom is all about, in case you don't know much about this company. WorldCom handles 70 percent of all of the Internet traffic in the world. Seventy percent, through -- primarily through an outfit called UU Net, 50 percent of all corporate communications 30 percent of long distance, MCI. You're familiar with that.
Take a look on their Web site. You can see this network. Kind of looks like a route schedule for a major airline. Let's hone in, here, on North America for just a moment. And, if you look at this chart, and I'm not going to bog you down with too many stats, here, but they have a lot of very significant pipes. And some of them, if you look at that lower portion there, it says 10 gigabytes per second. That equates to 10,000 Bibles, per second, 10,000 Bibles. We're not sure how many Pledges of Allegiance that would be, but a bunch.
Now, let's talk about mutual funds, shall we, for just a moment. Yahoo is as good a place as any. We picked this place randomly. This is, by no means, an endorsement of any product. But, if you want to go to Yahoo and find out about your mutual funds, you click on the spot that says mutual funds. Put in the symbol for your funds.
These happen to be the top five funds that hold this WorldCom stock, Vanguard Windsor, Vanguard 500, the Oppenheimer Quest, Hartford Capital Appreciation, and the Vanguard Prime Cap. Now, you want to click on one of them. It'll take you to an overview of the particular fund, how it's done. That's, kind of, graph, kind of mirrors the stock market, if you will, fairly close. And, if you go a little deeper in, clicking on the holdings column, you can see the top holdings for that particular fund. In this case, Citigroup is at the top of the list for this fund, but look down the list, not too far down the list. You'll see WorldCom there. There it is, about 3.1 percent. You see the loss. You've heard about the loss. That's not news to you. Eighty-eight percent. Now, how much does that effect the overall performance of the fund?
Your guess is as good as mine because this is a tough market, and there are a lot of things that are sending these particular funds, like this one, which happens to be Oppenheimer Quest, on a downward ride on the roller coaster. Let's take a look at this one and its holdings. Same scenario. You look at this one, and they, actually, hold a little more WorldCom. Number two on its list. Five point five percent. Once again, that same grim number, there, 88 points, 6.4 percent loss. Ouch.
Now, if you want to find out a little bit more, and you're in the buying mode, go to a place like e-trade. Once again, randomly selected. Click on the spot that gives you mutual funds, allows you to power search depending on what kinds of stocks you're looking for, international, national, aggressive, non-aggressive, that sort of thing. You pop in there. You can check out their all star funds, as well, and go from there. And, among the things you can pull up are the prospectus, or is it the prospecti? I'm not sure.
But whatever the case may be, you want to get into some serious reading? You can start reading the prospectus. And you'll find out what those mutual funds have, and if they have the things that make you uncomfortable, you may not want to go. "CNNmoney", great place to go, if you want to find out about news about all this. It effects not just individual stocks, but of course, these mutual funds which you might have.
The bottom line advice I could give you, and I am, certainly a layman, but most people hold mutual funds for long-term investments. Now, it's not a kind of thing you sell, in a situation like this. Very difficult to cull out exactly what portion of these mutual funds' losses are related to WorldCom. In other words, hold onto them, for now, but you, certainly, want to be an educated consumer, if you're thinking about buying right now -- Fredricka.
WHITFIELD: All right. Good advice. Thank you very much, Miles O'Brien.
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