Evening star., 1953-03-16
What everybody ought to kno,o...
About This Stock And Bond Business

1OAA x AAA"
should ever let his long.term evaluation
Of stock be affected BY fractional price
fluctuations. These, after all, are only mat
tiers of moment to the speculator.
What Is Speculation?
just how does sPeculator differ from
an investor? :,
A speculator is man who buys secu-
rites, expecting the price to rise SO that he
will make profit on his purchase, usually
in short period of time Or he may sell
securities expecting the price to drop. The
important point is that he doesn't buy
securities as investments-for the sake of
dividends.
The specularor performs valuable serv.
ice in the stock market because he is will
ing to take risks-and risk, the risk of
sudden price change, is an inevitable part
of any free market, whether it be a market
for securities or foodstufs or any other
commodity.
Suppose you own stock in Typical
Manufacturing, and suppose you want to
sell that stock because you think the earn
ings outlook is bad. You might not be
able to sell at anything like fair price
if it were not for 4 speculator and his
willingness to assume the risk that you
want to dispose of.
Bat no one sboaId speculate Gnle5 be can
afford to take risks. We've said that re.
peatedly in public advertisements and in
counseling our customers.
When Should You Buy or
Sell Stocks?
Of course, every stock buyer naturally
wants to buy as low as he can and sell
as high as he can. That's why we main
tain close, continuous study of market
conditions at all times and make our find
ings available 20 the investing public.
Deciding Wbsn to buy or sell is often
just as important as deciding Wbat to buy
or sell. That's especially true with respect
to the sale of stock. If you own stock
which has risen to such high price that
you wouldn't consider buying, it's just
good sense to atleast consider selling.
Too many people make the mistake of
buying stocks, then putting them away
and forgetting about them. That's bad
business. If you want to invest success
fully, you've got to be alert to investment
opportunities. What may have been
good buy last year or even last month
may not be good buy next year or next
month.
What Is the Stock Exchange?
The securities of more than / 200 major
companies are listed on the New York
Stock Exchange, which means that they
have been accepted for trading there.
ALI buying and selling on the Exchange
is done between the hours of 10 Am. and
$3.50 PM, New York time, Monday
through Friday.
The Stock Exchange is located on the
corner of Wall and Broad Streets in New
York City, and the trading floor is an
area about half the size of football field.
Functionally, the Exchange is voluntary
organization, 160 years old, that consists
now of 1875 members who have bought
memberships Commonly called seats"
on the Exchange
Mostmembers of the Exchange represent
brokerage firms whose primary business
is carrying out the orders of other people,
the public generally, for the purchase or
sale of stocks. They are paid standard
commissions for executing these orders
for their customers. To provide service
for investors throughout the country,
these firms maintain many Offices. As Of
Jan. 1, 1858, $40 member firms of the
Stock Exchange operated 1920 Offices in
431 cities. This firm alone has 1O7 Offices
in 1903 cities.
Only member brokers can execute Of
ders to buy or sell securities listed on the
Exchange If you give an order to some
one who is not part of New York Stock
Exchange brokers organization, that order
must ultimately be turned over to men,
Der broker. In such circumstance, you may
be charged small commission or service
fee over and above the regular commission
to the member broker.
In addition to the New York Stock Ex-
change or big. Board" there are more
than a score of other exchanges, such as
the American Stock Exchange formerly
called the Curb Exchange), the Mid
West Stock Exchange and the Toronto
Stock Exchange. We are members of all Of
them.
Still other stocks and bonds aren't listed
on any exchange. These unlisted securities
are bought and sold in the "over-the-
counter" market.
ALI bank and insurance company stocks
are sold in this market; so are many stocks
of big companies, but Enthusiastically an
over-the-counter transaction is apt to in
volve stocks that have only local or regional
reputation.
In most over-the-counter transactions,
the security dealer acts not as an agent but
as principal. If you are buying, he sells
you stock he owns at net price you agree
on; you are selling, he offers TO buy from
you at set price. Many New York Stock
Exchange brokers also act as dealers in un-
listed securities. Merrill Lynch does, and
as matter of policy we will handle over.
the-counter orders on commission basis,
just as we would orders for listed stocks,
or at a net price, as the customer prefers.
Who May Buy Stocks?
Anybody-or perhaps we should say
any honest and responsible citizen. Fol
their own protection, brokers have to be
sure about the responsibility of their Gus.
toners because they accept oral orders to
buy or sell. You'll find it q relatively
simple matter to establish your reliability
with broker and to open an account.
Many potential investors hayen'tbought
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