The Ypsilanti daily press. (Ypsilanti, Mich.) 1928-1962, 1943-04-12
BY Roger w. Babson

BY Roger W. 8abson
Baltimore, Md. Apr l2-Stock
values have risen approximately
400 in the past ten months. be-
/ lieye that even further profits, par
ticularly in peace stocks and GER
tain other situations. will be avail
able before the year ends. lnyes-
tors must appreciate. that the
prices of stocks today and for some
| time past are subject both TO world
| and to domestic conditions. The
| outlook for specific industries also
| depends upon the earnings, man
agement, dividend record and 9th
er basic factors. In view Of the
etent OF the recent trading in low
priced issues. feel il advisable to
I emphasize a few principles that
may lead TO success in investing.
Fundamental Considerations
A mans, OF for that matter a
woman's, first duty. aside from
raising a family, is to become eco
nomically independent. Regard
Bless OF New Deal legislation
, taxes. initiation or any other bugs
in the ointment, this can still be
done. This means that readers
should first allot a portion of their
income to war bonds: second, ar.
range for adequate life insurance;
third. hulld-np a substantial say,
ings account. | assume, of course,
the prospective stock purchaser is
also out of debt
The investor is now ready to Sc.
lect his individual securities What
are the factors that should determ-
inc his choice Management might
well head the list. Without honest
and capable management no com.
pany can do well indefinitely even
though the outlook for the indus
try may be excellent BE sure,
too. that the directors and officers
own an adequate share of their
company and, helce, share invest
ment responsibility with their
stockholders. Labor is such a fac
tor in all management problems TO-
day that companies having low
wage costs in proportion TO their
total operating expenses should be
sought. Examples are chemicals
and hydroelectric utilities.
Equities and Dividends
Personally. ! like a stock that
constitutes a 1900 equity This
means buying into company that
has no nding bonds, notes or
preferred stocks. Some OF the
grocery and other chains are illus
tvations OF this group. Many com
panios. during the past year, have
reduced their bonded Indebtedness
or bought in their preferred stock.
such companies wisely are getting
set to weather future storms.
4 consideration OF dividends IS
also OF importance In judging the
worth OF stock. Companies whose
dividends do not exceed one-haif
their net earnings should he safe.
Those with long. unDroKen diyi-
dend records which have survived
more than one war or depression
may generally be counted upon
TO continue their good perform
ance. The best examples in this
group are the fire insurance
stocks. Several have been paying
dividends for 100 years.
Depressed and Lona-Growth Stocks
Regardless of the position of the
stock market, some stocks can
usually be found which are unduly
depre ssed. Any stock selling at its
historic low usually has only one
way to go from there and that is
up. In other words, buy basiCaliy
good stocks when someone else
chucks them on the dump heap.
Tire and rubber stocks were a
good example of such condition
when they slumped so badly after
Pearl Harbor; but they have since
recovered. Perhaps real estate
securities are now the best illus
tration of this depressed group.
Long growth companies repre-
sent another type OF stocks which
are always attractive. In the early
twenties the automobile stocks
qualified. The chemical industry
has long been recognized in this
group. But today il Is so general
" stamped that most stocks in this
class are not cheap. The air trans
port companies may be good eX-
ample. Those companies closely
allied with the new industry Of
electronics, such as General Elec-
trio and Radio Corporation u
America-may yet be worthy u
consideration in this group. Air
conditioning companies may have
a future
Today's Best Bets
The ny In our economic oint-
ment today is initiation All that
initiation means is an over supply
OF dollars in relation to the supply
~ available goods The value Of
the dollar is going down and hence
IT loses q lot of ifs purchasing
power This loss can be made up
only through profits from initiation.
The best protection from an infla-
( ton point Of view IS In stocks
lacked by tangible resources. Com.
ranies owning natural resources.
Ike the oil producers. are prac.
. Teal example. understand that
/ the two companies which have the
/ most oil underground In the United
states are Humble and Ohio Oil.
Finally. do not forget that some
, day The war will be over. Even