| As an investment category, yes. All sorts of prudent | | | | investment- or bet-of $100 may purchase 500 or 1,000 |
| and conservative institutions colleges, pension funds, | | | | shares which make a man feel big, whereas the same |
| foundations, trust departments invest in stocks. | | | | amount buys only a fraction more than one share of |
| There is, technically, greater risk in common stocks | | | | American Tel and Tel, which is discouraging and |
| than in the Forex. But as any experienced investor can | | | | makes a man feel small. Furthermore, a penny stock |
| tell you, there are many not-unusual situations in which | | | | only has to rise a penny to double in value; AT&T has |
| a common stock can be viewed as a better safer | | | | to go to around 160; and with the cunning of the |
| investment than the issues ahead of it. | | | | ignorant, even penny-stock investors seem to know |
| Or, take the common stocks of corporations like | | | | that the rate of movement-up or down-is swifter |
| General Electric and Union Carbide. These, as it | | | | among low-priced stocks than high. And finally-and this |
| happens, are the only issues on the companies' books. | | | | is the most insidious argument of all-the penny-stock |
| Who would argue that the bonds of even a first-class | | | | buyer persuades himself that the amount of money he |
| railroad, for example, were necessarily safer? | | | | puts up isn't too important; after all, he's riding a long |
| Safety also depends, to an extent, on the price at | | | | shot. |
| which the stock was bought. A company may be solid | | | | What is wrong with all of this is that at no point does |
| as a rock, but eager investors may have bid its stock | | | | value enter into the calculation. Anyone who does not |
| to an unrealistically high level in terms of the per-share | | | | consider the worth of what he is buying is a gambler, |
| earnings likely to be attained. If a quarterly or year-end | | | | not an investor. The sorry result is that a few bad |
| earnings statement does not bear out the optimism of | | | | gambles can sour an otherwise sane person on the |
| the eager buyers, they may begin to unload. | | | | true value of investment. |
| The man who has bought near the top and wants to | | | | Beyond this, safety is largely a matter of sanity. There |
| hang on may see a dismaying depreciation in his | | | | are many ways of examining a stock and of judging |
| holdings, even though, by all investment standards, he | | | | the time to buy it or sell it. All of them are available to |
| does own a good, safe stock. | | | | the average investor. Learn them and use them. You |
| The point is, some stocks are safer than others, and | | | | will never get stuck with a poor stock masquerading |
| the value of all stocks may shift and vary and thereby | | | | as a safe one. |
| alter temporarily their safety-the possibility of cashing | | | | Hedging Against Inflation: One of the big arguments in |
| them at the price paid-for the investor. | | | | favor of stocks bears on another aspect of safety. |
| It is not hard to find a safe stock, if by that you mean | | | | This is the fact that stocks may frequently act as a |
| one representing a lively, alert, efficient company that is | | | | hedge against inflation. |
| unlikely to collapse and fail. While not every stock listed | | | | Inflation, according to the classic definition, is the |
| on the New York Stock Exchange is a daisy, the | | | | economic condition resulting in a rise in prices and a |
| mere fact that it has met the requirements for listing | | | | drop in the purchasing power of the dollar. In effect, |
| says much in its favor. For one thing, to obtain listing a | | | | goods are scarcer than money. Thus, through the |
| company must agree to report its financial condition | | | | operation of the forces of supply and demand, goods |
| regularly. This alone makes it possible to evaluate the | | | | become more expensive. Dollars, relatively more |
| company's performance and prospects, and thus | | | | plentiful, become cheaper-more of them are needed to |
| estimate whether its stock is a good buy. | | | | buy this item or that. |
| This in not to say that unlisted stocks or stocks carried | | | | In the United States, inflation has been at work for |
| on other exchanges are chancy. As you can quickly | | | | some time. It is not runaway inflation. Our productivity |
| discover, some rather fine companies are not on the | | | | (goods) is managing to stay fairly well abreast of our |
| so-called Big Board-the New York Stock Exchange. | | | | prosperity (money). Still and all, since 1939 the |
| The Great Atlantic and Pacific Tea Company, Humble | | | | Consumer's Price Index means of measuring the |
| Oil, and Creole Petroleum are listed on the American | | | | fluctuation in the prevailing prices of certain basic |
| Stock Exchange. Such representative companies as | | | | household commodities--has jumped from 99.4 to |
| Anheuser Busch, Eli Lilly, and Time, Inc. are unlisted, and | | | | 195.7, almost a 100 per cent rise. In the same period, |
| traded only in the over-the-counter market. Few | | | | the dollar's value has dwindled from 100 cents to 47.3 |
| insurance companies and no banks both quite stable | | | | cents-value, of course, representing what the dollar will |
| stock categories-are listed on the New York Stock | | | | buy. |
| Exchange. | | | | In a fluid situation like this, safety of investment takes |
| Still and all, the new investor will be wise to confine his | | | | on a new dimension. Many conventional ways to save |
| dealings to stocks that are relatively well-known and | | | | through a savings account, an annuity, a Government |
| have a ready market. For out of the estimated 5,000 | | | | bond held to maturity can practically guarantee safety |
| public, stock-issuing corporations in the United States | | | | of principal. You will always get out the same number |
| there are, inescapably, some dogs. They do not have | | | | of dollars you put in. But there is no assurance as to |
| to be thieving and corrupt. Poor management, wobbly | | | | how much those dollars will buy. |
| financing, and an inability to keep pace with the times in | | | | Stocks cannot guarantee that the amount you have |
| production and distribution are reason enough for the | | | | invested will be returned to you, safe and sound. But |
| investor to avoid them. | | | | when dollars are plentiful and goods bring a fat price, it |
| Here, too, may be mentioned the "penny stocks," which | | | | is possible that a company in whose earnings you |
| have enjoyed an unfortunate vogue in recent years. | | | | have a share will be distributing dividend dollars more |
| These glitter like a prize in a shooting gallery, but they | | | | liberally. |
| promise something for nothing, and this is no premise | | | | So shares and the Forex have risks but if you are |
| for a smart investor to accept. Many are out-and-out | | | | aware of them you can make sure you limit them. |
| swindles. Others are legitimate enough, but rank as the | | | | If you invest in Forex or shares "paper trade" first and |
| wildest sort of speculation; double-0 on the roulette | | | | only use real money once you feel comfortable. |
| wheel, or a mare in the Kentucky Derby will come | | | | With the Forex you can use good Forex software |
| home a winner more frequently than these babies. | | | | that is available to limit your losses. |
| For the man who can only be called the ignorant | | | | A good rule is worth mentioning: Never risk more than |
| investor, they have a certain attraction. The small | | | | you can aford to lose. |