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Preface - The New York Security Dealers Association, which prepared the material for, and sponsored, this book, believes it has performed a unique public service in providing a readable and comprehensive guide to trading and investment, at a popular price.

01. Marketable Securities - M ou can't be an investor unless you have money to spare. Fortunately, in America today we have the highest per capita income of any nation in the world. Tens of millions of people have money to spare surplus money above living needs, and after the basic thrift program, namely, savings accounts and life insurance, has been established.

02. Marketability + Markets - We live in a "market" economy. If you sell your house, you put it "on the market." You buy groceries in supermarkets. You can buy or sell anything from a pin or a penny oil stock to the Empire State Building. There's a market for almost everything except stupidity. But by far the most accurate and best organized of our markets are those for securities.

03. Selection Of Securities - You will recall from chapter I that the reason so many people are now interested in marketable securities is because they have surplus funds. These funds they want to put to work (1) to expand their income, (2) to increase their capital, and (3) to assure financial serenity in later years. And, among most, there are high hopes that fortunate investments will make them rich.

04. Long-Term Investments - Bonds and preferred stocks are essentially defensive investments. They aim to protect the invested funds, but they are not designed to advance or to expand in value. For really flexible investment and substantial opportunity for capital gain, the security for you to look at is the common stock. It had quite a time becoming "accepted," but now it has not only arrived, it is acclaimed as not only almost the ideal investment, but one uniquely equipped to make you rich if you happen upon the right selection.

05. Income - We mentioned earlier that those of a most conservative temperament find greatest contentment in fixed income securities designed to protect principal value. Such persons will stick pretty closely to savings accounts, bonds, or preferred stock. For those of more flexible temperament, willing to accept in good grace the wider fluctuations in market value characteristic of common stocks, but still primarily interested in income, there are some well-tested issues to choose from.

06. Growth - The most magic word in Wall Street in recent years has been "growth." If you bought "growth" stocks, you were in theory moving along the royal road to riches. So great has been this fetish for growth that new and relatively untested electronic and scientific issues have sold at fantastic prices, sometimes as high as 70 or 80 times net earnings, or with no earnings at all. So although some growth stocks performed daz-zlingly, there can be great peril in paying too much for them, especially if the corporate progress so hopefully predicted may never materialize.

07. Trading Profits - For most people the greatest success in stock investment comes through selection of sound securities and hanging on to them. The gift of knowing when the market is "too high" is a rare one, and probably as much money has been "lost" by selling a good security too soon as by buying poor securities in the first place.

08. Long-Shot Speculation - America is a nation of optimists. Most of us are willing to "take a chance" on a gaudy speculation if it appeals to us, even though we don't really know much about it. It's the hope of "getting in on the ground floor" of another Amerada, Ampex, IBM, or Texas Instruments that causes so many of us to get starry-eyed about some promotional stock selling at 50¢ a share.

09. Share Privilege - So far we have gone into some detail about debt securities bonds and debentures and equities, namely, preferred and common stock. But the entire roster of marketable securities doesn't stop there. The imaginations of lawyers and financiers have dreamed up some hybrids that start out as one thing and may wind up as something else. These split-personality securities are called convertibles. The most common and popular variety is the convertible bond or debenture, so we'll talk about that first.

10. Investment Companies - There are basically two different ways in which to invest. You can personally select and purchase individual securities bonds, preferred stocks, common stocks, or warrants from the thousands of issues of marketable securities available. Or you can delegate the entire business of security selection, supervision, and trading by buying shares in an investment trust. These trusts or investment companies make a profession of investment management.

11. Puts + Calls - Most market investment and speculation is in actual securities bonds, preferred stocks, common stocks, and warrants. Further, most individual investments are made on an outright basis that is, they are bought and paid for, for cash. There is, however, a substantial amount of buying on borrowed money (like buying a house on a mortgage), either in "margin" accounts or by borrowing from banks or finance companies to purchase securities. A twist on the Shakespearean quotation that should guide you here: "Neither a borrower nor a lender be; but lodge thy surplus in good equity."

12. Commodity Trading - While commodities are not, strictly speaking, marketable securities, certain of them enjoy broad and active trading markets and have proved attractive media for speculation. Speculation is the word for it! The commodity market is no place for timid investors. You might think it would be unhandy to trade in bushels of wheat, bags of coffee, or bales of cotton. It would be! But you don't actually trade in the commodities themselves; you trade in "contracts" for them. No trader ever has to go down to a warehouse with a wheelbarrow or a truck to make or receive delivery.

13. Corporate Characteristics - With almost 50,000 different securities on the market to choose from, including issues of many thousands of individual corporations, it might be well to devote a few pages to the structural differences among the various corporate enterprises and the different forms of government regulation which may affect their capitalizations and earning powers.

14. Investment Program - The earlier chapters in this book have been designed to acquaint you, in a somewhat panoramic fashion, with the entire range of marketable securities and the workings of the marketplace. With this background of information you should, by now, be quite well prepared to appraise the usefulness and function of each class of security and, more specifically, to design a long-range investment program suitably tailored to your own individual needs.

15. Advice + Guidance - People starting out to purchase securities usually look around for competent advice. That is natural enough, but to whom should one turn? A friend who does well in the market may give you some good ideas, but his objectives and viewpoints may differ from yours. Further, he may be a gambler willing and able to assume heavy risks. So friends, even though they may be successful in the market themselves, are not always useful; and sometimes they may be costly when it comes to financial advice.

16. Exchange Commission - Because securities are intangibles, you cannot determine from the engraving or printing on a bond, or stock certificate its quality or worth. Beautifully engraved certificates may evidence ownership in an oil-less oil well or in a submerged real estate development; or in a "blue chip" like Standard Oil of N. J. or Morgan Guaranty Trust Co. Shakespeare's statement about people applies as well to securities: "There's no art to tell the mind's construction in the face."

17. Market Precepts - There are certain general rules and practices in handling investments and building a securities portfolio that deserves consideration even though their application may appear more general than specific.

It has always been considered prudent to keep some cash resources in reserve, regardless of the state of the market, or the urgent attractiveness of certain issues. Usually this reserve should consist of money in a savings account sufficient to live for six months, in the manner in which you and your family are accustomed.

18. Executing Order - The argument for investing in marketable securities, and particularly in common stocks, has been pretty well established in the earlier pages of this book. America is a growing nation; and one of the best ways in which to share in this growth is by ownership of good common stocks. Long-term stockholders in such companies as Minnesota Mining, American Electric Power, Hartford Fire Insurance, Hanover Bank, General Electric, General Motors, American Express, Eli Lilly, McGraw Hill, etc., have enjoyed a steady rise in earnings, dividends, and market value of their holdings.

Words Of Wall Street - A swift glossary of the more common words and phrases that make up the special language of the market.

Accrued interest: The amount of interest accumulated on a bond, and due to the owner, since the last interest payment.

Amortization: The writing off of depreciation, depletion, expenses and deferred charges; also reduction of indebtedness by regular principal payments.

Afterword - Mil sponsoring the publication of this book, The New York Security Dealers Association considers it to be a concise and non-technical presentation of the workings of the securities industry. It fills a long wanted need by the investing public for a better understanding of the "Wall Streets" throughout the nation.

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