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How Safe Are Shares Or The Forex?

As an investment category, yes. All sorts ofattraction. The small investment- or bet-of
prudent and conservative institutions$100 may purchase 500 or 1,000 shares which
colleges, pension funds, foundations, trustmake a man feel big, whereas the same amount
departments  invest  in  stocks.buys only a fraction more than one share of
American Tel and Tel, which is discouraging
There is, technically, greater risk in commonand makes a man feel small. Furthermore, a
stocks than in the Forex. But as anypenny stock only has to rise a penny to
experienced investor can tell you, there aredouble in value; AT&T has to go to around
many not-unusual situations in which a common160; and with the cunning of the ignorant,
stock can be viewed as a better safereven penny-stock investors seem to know that
investment  than  the  issues  ahead  of  it.the rate of movement-up or down-is swifter
among low-priced stocks than high. And
Or, take the common stocks of corporationsfinally-and this is the most insidious
like General Electric and Union Carbide.argument of all-the penny-stock buyer
These, as it happens, are the only issues onpersuades himself that the amount of money he
the companies' books. Who would argue thatputs up isn't too important; after all, he's
the bonds of even a first-class railroad, forriding  a  long  shot.
example,  were  necessarily  safer?
What is wrong with all of this is that at no
Safety also depends, to an extent, on thepoint does value enter into the calculation.
price at which the stock was bought. AAnyone who does not consider the worth of
company may be solid as a rock, but eagerwhat he is buying is a gambler, not an
investors may have bid its stock to aninvestor. The sorry result is that a few bad
unrealistically high level in terms of thegambles can sour an otherwise sane person on
per-share earnings likely to be attained. Ifthe  true  value  of  investment.
a quarterly or year-end earnings statement
does not bear out the optimism of the eagerBeyond this, safety is largely a matter of
buyers,  they  may  begin  to  unload.sanity. There are many ways of examining a
stock and of judging the time to buy it or
The man who has bought near the top and wantssell it. All of them are available to the
to hang on may see a dismaying depreciationaverage investor. Learn them and use them.
in his holdings, even though, by allYou will never get stuck with a poor stock
investment standards, he does own a good,masquerading  as  a  safe  one.
safe  stock.
Hedging Against Inflation: One of the big
The point is, some stocks are safer thanarguments in favor of stocks bears on another
others, and the value of all stocks may shiftaspect of safety. This is the fact that
and vary and thereby alter temporarily theirstocks may frequently act as a hedge against
safety-the possibility of cashing them at theinflation.
price  paid-for  the  investor.
Inflation, according to the classic
It is not hard to find a safe stock, if bydefinition, is the economic condition
that you mean one representing a lively,resulting in a rise in prices and a drop in
alert, efficient company that is unlikely tothe purchasing power of the dollar. In
collapse and fail. While not every stockeffect, goods are scarcer than money. Thus,
listed on the New York Stock Exchange is athrough the operation of the forces of supply
daisy, the mere fact that it has met theand demand, goods become more expensive.
requirements for listing says much in itsDollars, relatively more plentiful, become
favor. For one thing, to obtain listing acheaper-more of them are needed to buy this
company must agree to report its financialitem  or  that.
condition regularly. This alone makes it
possible to evaluate the company'sIn the United States, inflation has been at
performance and prospects, and thus estimatework for some time. It is not runaway
whether  its  stock  is  a  good  buy.inflation. Our productivity (goods) is
managing to stay fairly well abreast of our
This in not to say that unlisted stocks orprosperity (money). Still and all, since 1939
stocks carried on other exchanges are chancy.the Consumer's Price Index means of measuring
As you can quickly discover, some rather finethe fluctuation in the prevailing prices of
companies are not on the so-called Bigcertain basic household commodities--has
Board-the New York Stock Exchange. The Greatjumped from 99.4 to 195.7, almost a 100 per
Atlantic and Pacific Tea Company, Humble Oil,cent rise. In the same period, the dollar's
and Creole Petroleum are listed on thevalue has dwindled from 100 cents to 47.3
American Stock Exchange. Such representativecents-value, of course, representing what the
companies as Anheuser Busch, Eli Lilly, anddollar  will  buy.
Time, Inc. are unlisted, and traded only in
the over-the-counter market. Few insuranceIn a fluid situation like this, safety of
companies and no banks both quite stableinvestment takes on a new dimension. Many
stock categories-are listed on the New Yorkconventional ways to save through a savings
Stock  Exchange.account, an annuity, a Government bond held
to maturity can practically guarantee safety
Still and all, the new investor will be wiseof principal. You will always get out the
to confine his dealings to stocks that aresame number of dollars you put in. But there
relatively well-known and have a readyis no assurance as to how much those dollars
market. For out of the estimated 5,000will  buy.
public, stock-issuing corporations in the
United States there are, inescapably, someStocks cannot guarantee that the amount you
dogs. They do not have to be thieving andhave invested will be returned to you, safe
corrupt. Poor management, wobbly financing,and sound. But when dollars are plentiful and
and an inability to keep pace with the timesgoods bring a fat price, it is possible that
in production and distribution are reasona company in whose earnings you have a share
enough  for  the  investor  to  avoid  them.will be distributing dividend dollars more
liberally.
Here, too, may be mentioned the "penny
stocks," which have enjoyed an unfortunateSo shares and the Forex have risks but if you
vogue in recent years. These glitter like aare aware of them you can make sure you limit
prize in a shooting gallery, but they promisethem.
something for nothing, and this is no premise
for a smart investor to accept. Many areIf you invest in Forex or shares "paper
out-and-out swindles. Others are legitimatetrade" first and only use real money once you
enough, but rank as the wildest sort offeel  comfortable.
speculation; double-0 on the roulette wheel,
or a mare in the Kentucky Derby will comeWith the Forex you can use good Forex
home a winner more frequently than thesesoftware that is available to limit your
babies.losses.
For the man who can only be called theA good rule is worth mentioning: Never risk
ignorant investor, they have a certainmore than you can aford to lose.



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