Ey TIS - More than 30 million Americans own securities. Totally this amounts to over 150 billion dol- lars worth. Every day on the average some 12-15 million stock shares are bought and sold on the New York Stock Exchange alone. In the course of a year nearly 4. billion dollars worth of shares are traded back and forth. There are about 5,000 brokers who do the buying and selling for stock- holders in the United States. All this sounds like a great deal of activity. Why are so many people so interested? There must be something here that is very attractive. Of course there is. People who own stock hope to make money. ‘A great deal of money if they are very well advised or very lucky. But therein lies the hitch. How many stock- holders are very well' advised? That is, who know, reasonably well, which stocks to buy, when to ~ buy and when to sell - which is the key to the whole business of making a profit. _ Before listing some of the things ~ you should know about the stock market, lets first explain why the stocks are for sale in the first place. Basically, a. common stock, the most widely held type of security, is a share in a com- pany. When you buy a share of _ stock you become.one of several thousand or several million owners of that company, depending upon its size. No matter how few shares ~ you own, you have a voice in the company. You are entitled to attend the annual meeting of stockholders. You can vote for the members of the board of directors, you can stand up at the meeting and ask questions about the company’s management or plans. If you don't attend annual meetings you vote. your stock by proxy. You also get regular reports on the progress of the company and a full accounting each year in the annual report. So when you buy stocks, you buy a small piece of ownership in the company. ~~ Why are companies willing to sell you shares in their company? The main reason is that when a small successful company believes it can become much more success- ful if it had more money for ex- pansion expenses, it decides to stop being a “private” company and become a “public” company. It does this by making a public ~ offering of a specified number of shares. In effect, it invites _outsiders to come into the com- | pany as part owners to share in its success - or risk in its failure. If the company is successful, the value of the stock usually in- creases so that at some future date the owner can sell it at a price higher than he paid for it. The resulting profit may be more than the same amount invested in ‘a bank or other fixed-dollar in- vestments. That, basically, ‘is the reason why stocks are sold to the public. And because so many people have been willing to invest in stocks, they have provided money for thousands of companies in the United States to grow from small firms to giant corporations. In the course of this progress, many millions of stockholders have also profited in the growth. They have profited not only in the increas- ed value of the stock but in the payments of dividends - (a share in the profits) they have received. Stocks and bonds versus other kinds of investments. People are attracted to the stock market because there is the hope that their money will work harder than it might in a savings bank, savings bonds or other forms of investment. In many cases, this is true because over the years money in the market has produced higher in savings accounts. This has beer possible because, on the average, stocks traditionally improve in valve in say five, ten or twenty years. Some have grown very slowly and steadily. Others grow very rapidly. Some do not grow at all. Some, in fact, decline. This is the risk element - and anyone considering the stock mar- ket must be prepared to accept the possibility of losses. In return for this risk, however, is the pro- spect of occasionally making much more money than you would from other investments. The direct income from stocks; that is, the dividends paid are generally less than you might earn from a savings account. The average portfolio of stock - over the years - probably represents a current yield of not more than 3%. Savings in a bank will earn between 5% and 6%. So you usually do not buy stocks solely for direct income but for the hope that the selling price will be higher than your purchase price. Right now, however, the stock market is in a down cycle and there are many blue chip companies priced to yield 6% or even more. Bonds are different. Here you are guaranteed a fixed return which may range from 6-8%. Bonds, however, generally offer limited risks and limited profit potential. Although bonds are traded in the market, the face price you pay for it will be about the price you are returned when you sell it at maturity say in ten or twenty years. Meanwhile, you have accumulated interest over the years. If you become interested in the stock market, you'll soon hear of securities. There are preferred stocks which pay a fixed income and have a preference on a com- pany’s income before common stocks. There are warrents which are convertible to common stock at a guaranteed price at some future time. There are corporate bonds issued by companies when raising money which pay a fixed rate of return. There are municipal bonds issued by cities for special funding purposes. These usually pay lower interest rates than coporate bonds but may be good investments for people in high income brackets because their dividend income is free from federal income tax - and state taxes in the states where pur- chased. Then there are mutual funds which are basically a pool of investment money managed by professionals who do the buying and selling of the securities. Mutual fund purchasers become shareholders in the fund which in turn is a shareholder in many companies. So far--fine. Sounds like a good idea. It is - and indeed many millions of Americans have made money - and many have become wealthy from their stock market investments. But the one big thing to be remembered is that every company has its ups and downs. And the economy of the country has its ups and downs - from prosperity to recessions. Thus, the value of stocks can range from way up to way down. This is the risk element. This is why it may be just as easy to go broke as it is to make money in the stock market. And this is why nobody investing money in stocks only after you have a secure savings account, and enough money on hand for all emergencies. Some experts say this should amount to at least one full year’s expenses.) Before investing a penny in stocks, you should prepare your- self with some very basic informa- tion. As you have read here - there are different kinds of stocks and securities - and different ways to invest. Perhaps the best way is to visit a local stock broker. You will need him eventually in any case. He will provide you with basic literature at no obligation. You might also obtain free begin- ning information booklets by writ- ing, Public Relations Dept., New York Stock Exchange, 11 Wall Street, New York, N.Y. or the American Stock Exchange, Trinity Place, 86 Trinity Place, New York, N.Y. 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Significant historical Pennsylvania newspapers