Evening star., 1953-03-16

particular stock is largely determined by
one factor earnings. That includes what
the company has earned (its past record),
what it is earning tits present state of
healthy, and what it might earn tits pros
poets for the future).
So you see, selecting stock is matter
of knowledge and judgment. You should
know the answers to such questions as
these: How aggressive is the company?
How good is its management? How pop
ular are its products?
Then you have to look outside the
company and consider the whole industry
in which it operates. Is its future bright?
(The buggy industry once offered many
good iqveStments.) And what about COM
Petitors? Are they in better shape than
your company?
Finally, you have to consider general
business factors. For instance, will rising
costs oflabor and raw materials pinch your
company?
These are just some of the factors the
intelligent investor wants to consider SO
that he can form a reliable opinion of
what his stock is likely to be worth
tomorrow.
Investment values constantly change.
That's why this firm has always urged
stockholders to 'Investigate-then In
vest" and to keep on investigating.
Why Do Stock Prices Change?
The price of stock at any given time
is nothing more than the collective ex-
preston Of all the opinions of all the
people who are then buying or selling it
their opinions about its value.
Ifa number of people conclude at about
the same time that particular stock is
overpriced, they may decide to sell it, and
the price will probably fall. Or they may
think it is selling at bargain prices and
decide to buy it. Their combined orders
may cause the price to rise.
That's why stock prices sometimes huc-
tuate sharply. Instead of changing by an
eighth or a quarter of point-which
means an eighth or quarter of a dollar
the price may change by several dollars,
either up or down, in short time.
What Are Bull and Bear Markets?
Sometimes a great many people will
decide more or less at the same time that
it is a good idea to buy stocks. Such gen.
eral buying action raises the average price
of all stocks. Ifthe price rise is big enough
and lasts long enough, we have what is
called bull market.
A bear market is just the opposite. The
average price of all stocks drops because
of widespread selling. To be bullish or
bearish simply means to believe that stocks
will 60 up or down.
incidentally, it is simple business to
keep track of whether the market as q
whole is moving up or down, because al
most every major newspaper publishes
daily the average price of some group Of
key stocks and reports whether that aver.
age is moving up or down. The Dow
Jones and Standard 6, Poor's Averages are
the best known of these indexes.
No one who owns stocks, however, is
ever as interested in what the market as
whole is doing as he is in what is happen
ing to the price of the stocks he owns or
those he may be considering buying. This
too, he can usually keep close check on,
because most major newspapers publish
detailed price information every day on
the most popular stocks-principally those
of the New York Stock Exchange.
HOtU to Read Stock Tables
These stock tables are not nearly as for
bidding as they look. Here is the way the
record might look on a given day for
Typical Manufacturing Co., listed alpha
betically, under column headings that are
almost self-explanatory:
Stock and Sales Open High Low Close Net
Div ms In zoos chg.
Typ. Mtg q 2sM 2sM IS 2sM IN
Reading from left to right, this shows that
Typical Manufacturing is currently pay.
ing 81 annual dividend on each share
of stock, that 1900 shares of the stock
were bought and sold during the day in
question. You can tell that the first sale
of the day was at 25A Tor $3.50 share
that the highest price for the day was 25N
the lowest was IS, and the last sale for the
day was at 25h, half point or 50e I
share above the last sale of the preredint
day. In addition, some papers also show
the highest price and the lowest price
recorded for Typical Manufacturing in thu
preceding year or the current year to date
such figures usually appear just before tn
name Of theAstock.
Day-to-day price fluctuations may b.
of interest 70 the investor, but there i
such a thing as letting them become Al
item Of TOO great concern. No investo