Nearly 12.5 million people in America today share common States alone.
This fact, so briefly stated, is very important the first rank. To summarize one of the deep and broad shifts in social and economic life of America in the twentieth century. Never before in our history have so many of us who have so much wealth of industrial nations, so much productive capacity, so a lot of profit potential.
Many elements have combined to bring this about. By the end of World War II in 1945, that stock ownership for all practical purposes the privileges of the well to do. Only the rich could afford to buy shares in significant amounts. Only people with surplus funds are able to ride out the market slump and the temporary loss of income and value. And only a few initiates truly educated and the information about the basic rules of market behavior and investment.
In the minds of most, the stock market is a major pitfall to be wary. Like all the public images, it is inexact, but not without basis in reason. Time and again in the capital expansion of the hustle and bustle of the nation that began after the Civil War, small investors have been whipsawed in the market struggles of the tycoon, and the panic and depression have been wrinkled bright dreams of prosperity. Sober people are surprised by the madness of rampant speculation of the Twenties. Everyone knows someone who has been burned in the disaster of the crash, and those not destroyed are still inclined to blame Wall Street for the depression that followed.
For most people, capital investment means buying a home. If there is anything left, he went into insurance and savings banks.
Myths die slowly. Recovery from depression consumed most of three decades. World War II lasted until the middle forties. During this period, the stock market continues to do business at the old stand, but with greatly reduced volume. Reflecting the times, it pulled itself back uphill to the top honor in 1936, very short from the summit of 1929, but still the highest point since the Crash. It decreased sharply in the recession of 1937, stumbled up and down in doubt for several years, and then retreat under the influence of the war. From 1942 on, however, despite occasional setbacks such as a recession in 1957, the trend has continued upward.
This nation emerged from the war barely aware of how highly the economic base has changed. Production of war has forced the expansion of industrial plants, mostly with the help of government funds. tax rates are high and profits are controlled encourage further investment in facilities. And the liberal post-war settlement allows the company to buy cheap government-built plants or depreciate quickly, thus reducing or eliminating what otherwise might have become long-term debt burden. The net result is a tremendous increase in book value of assets-in-the foundation of a large number of companies.
In addition, a voracious consumer desire. After going without for five years, Americans are ready to buy everything in sight. Industry, untouched by so much as a single enemy bomb, capable of rapidly converting to peacetime production. boom began. new car, new house, new appliances start filling the empty space in American life. And with this, familiar items that are very long for a new future, almost undreamed before the war: the television, hi-fi, sports cars, antibiotics, sedatives, frozen foods, synthetic fibers and fabrics, plastics, electronics, and-for in-rush applied in a peaceful future of atomic energy. Radio Corporation of America announced that four-fifths of the volume of current sales come from products that did not exist a decade earlier. With five decades, economists estimate that more than one-third of the nation's gross national product total value of all goods and services, is because research and development last ten years.
Probably never in history are people so rich in material things. By 1956, 37 million family-owned car rose 61 percent in eight years. By 1956, 37 million married couples lived in self-improvement households by 28 percent for a total of ten years earlier. Revenue $ 5000 per year, which mystical dividing line between scraping and comfort, has been achieved with 23 million families or individuals-jump 153 percent in ten years.
Inflation, subtle and invisible, also has been established and has begun to erode the value of the dollar. But that's not inflation, fugitives from the German disaster in two decades, but, tame "creeping" inflation-type mild stomach distress that accompany the rich life. Prices have risen inevitable. Generation of war babies grew up in the world of car $ 5,000, $ 30,000 home theater tickets $ 8, book $ 5, milk 28 percent, and coats $ 85. A nickel bought almost nothing. Even the candy soared 20 percent to six cents, large-and small candy bar, too.
End yet. Sixties here, and maybe-could-that the shooting pain of inflation will be diagnosed as ulcerous. But for now, the economic power seems generally will overcome the drag and resistance.
People not only spend more, but saving more. "Discretionary income," a pleasant bulge above and beyond the budget for need, is on the order of most families. Consumer Credit, which in the past have expanded dangerous outside people's ability to pay, has reached astronomical heights with amazing low percentage of default.
The flow is very large and unremitting dollars into the market has returned to profitability can not be described to the industry. The company has strengthened the foundation for their diligent, highly invested in the research, put yourself cash surplus, and still distribute a total dividend of the highest in history.
The combination of these forces and these events-and many others, as well-have been faithfully recorded by the stock market. It has a strong shot upwards, scaling peaks like a mountain goat, past the end of the frayed rope and ice axes roken marks the high point of 1929, and the rare atmosphere outside. As noted, approximately 12.5 million people who make the trip.
Who are these people and what they want? They are, for the most part, ordinary citizens of American parents who want a piece of America's future. They work, they earn, they put something by, and they believe that they know a solid investment, safe enough, capitalistic when they see one. For years, nearly fifteen, American businesses have made expensive, as people with half an eye can tell. This is a small town that has not acquired a small assembly plants, parts depots, retail outlets, sales offices, or some other part of one or other industrial complexes in the last decade. There is a subtle light of prosperity on these places, and if you can not see it, your local friends who work there will be happy to tell you about it.
What does not appear under someone's nose is in the air. Never has the industry looked so glamorous. This is not to say that the strikes and unemployment and other stubborn problems of capitalistic pattern has been eliminated, but that there is a new gloss and glitter to the ability of industry to perform and produce. Technology accelerated the postwar period has plunged the stodgy old business into the boundaries of the universe. Missiles, rockets, electronic miracles now a thousand kinds of meat-and-potatoes business not only to established giants such as General Electric, but for fresh young shoots such as Texas Instruments, Tracerlab, Ampex, Polaroid, and many other fast growing companies.
Usually, the excitement will be recorded almost exclusively by business and financial publications, except for the occasional rocket manufacturer name made the front page of the paper. But through television, the industry is now in every home. Not just to sell food, medicine, cosmetics, cigarettes, and equipment;-and-radio has much to say about this too. But to sell the industry itself-his intellect, his creativity, great concern with the comfort and national prosperity. With the extraordinary visual impact, institutional advertisements Westinghouse, U.S. Steel, duPont, Alcoa, and the rest of American business success story for all to hear.
Two main requirements of an active stock market was formed. Across the country, people with "discretionary income" to be acquainted with the sweet scent of success. There are buyers and something to buy.
But why choose the stock market? Is memory so short that everyone has forgotten 1929? Is this innocent wish to be taken to the cleaners, play games an expert?
No. Times have changed here, too, and the word is getting around. Millions of people make their first investment experience with war bonds, and found it good. The bonds were issued in denominations small enough for people to handle with ease. There are no fluctuations in their prices, so you can put them away and forget them. They continue to grow value, and can be withdrawn without fuss or problem. If these conditions can be duplicated in the stock market, investment may very well reasonable.
Of course, in the market, price fluctuation is inevitable. Common shares may not have the stability of government obligations such as bond-E. However, it has become a very respectable part of the merchandise. Workers learned that their union pension funds, including large blocks of shares outstanding sound. And often the company they work to offer them an opportunity to acquire shares through one type of monthly purchase plan or another. Various state commissions take a fresh look and decided that the common stock is safe enough to be included in the widows and orphans' trust funds, traditionally the most conservative type of portfolio.
And, above all, common shares on the market rose after the war has settled well. The annual interest rate not more than 3-3ј percent. Stocks that pay at least 4, often 5, and in some cases 6 and 7. When they are paid less than that, usually because of their price appreciation, which reduces the yield but pleasant increase in value. wrong with a good None. There are nuts and raisins in a cake, too: a split, stock dividend, refund the extra money.
Furthermore, the market came within reach of modest means. With monthly payments for a mutual fund can get a pro rata share of the equity portfolio that each item would be far too expensive to buy. And in 1954, the New York Stock Exchange pioneered the revolutionary Monthly Investment Plan (See Chapter 11) that allows the purchase of fractions of shares, regardless of price, is, routine cumulative. Brokers awakened to the huge army of untapped potential investors, with a smile inviting small account, and spent thousands of hours of educating anyone who will listen at the core of general-stock investment.
But all this will have an effect if people do not start believing the market. This belief is a long time coming. Stock is already working furiously since the disaster in 1929 to place their homes in order and to persuade the people of honesty and tranquility of their operations. But few listen, except professional, sophisticated traders and institutional buyers who do not need to be notified. However, efforts continue. Federal and state regulations come into force; procedures be tightened by the exchange floor itself to prohibit manipulation and sharp practices by insiders. When the hordes of post-war fall, the market has been swept clean and ready to do business.
People have cash. merchandise was interesting. And the market open, sincere, and bright with sunshine. With this order, apparently, some 12.5 million Americans have become investors.
So far, all is relatively calm. Although the market does not rise forever, that now seems to have every intention to try. 1957 recession was watched apprehensively by experts to see if it would crack the foundations and topple the market. But either a solid foundation down to bedrock, or just not big enough jolt. Market-and business-began to take its own in 1958. Now, 1960 found him on the track again, drank together and making happy noises about the prospect of a new decade ahead.
No markets go up forever. There is no market resistance to bad business and poor income. All markets are human and subject to human fears. This truth can not be said often enough, especially in times of great optimism. Market does not go down forever as well.
Stock market
But there is another unique feature of the current investors and the market so far has been a force for stability. It is a fact that most investors appear in for the long pull. They buy their stocks and socking them away, content that they have chosen wisely, and be ready to wait for long-term appreciation that historically has rewarded the patient investor.
There is a persuasive reason to follow such a course. Market favorite fairy tale concerns the people who buy, depending on, and live happily ever after. If, for example, began in 1933, you had invested $ 1,000 per year in the composite share price consists of 425 issues in the Standard & Poor's Industrial Index, you will be in twenty-five years has acquired 1699 shares worth $ 81,858 and received $ 46,874 in dividends . Do you reinvest dividends, tax less, you will have 1466 additional shares valued at $ 70,632. Of course, no such joint-stock, but the point is that a good part of the list industry has enjoyed spectacular success enough since Mr. Roosevelt's second year in office-and the inference is that, barring disaster, the next twenty-five years will be quite good, as well.
More specifically, and cases like this there are abundant cases of pair-Long Beach, California, who received $ 1,000 as a gift at their wedding in 1896. Some of it was invested in 10 shares of William Seward Burroughs' America Arithmometer Company, the starting point of Burroughs Corporation, now one of the leading manufacturer of business machines. Over the years, the couple diversify their holdings, but an important element of their portfolio Burroughs. On the death of his wife, spouse, in 1958, a legacy worth between $ 1 and $ 1.5 million.
Likewise, $ 10,000 invested in General Motors fifty years ago today would be worth approximately U.S. $ 6 million.
There are doctors who never saw the stock table from one end of another year, but a faithful invested $ 1,000 in duPont every December 1. She bought high, he buys low, always follow the rules of the calendar alone. A more haphazard system of investment-except for their arrangement, it will be difficult to find. But because the shares are duPont, he made a fortune.
Something like this seems to be in the minds of many investors today. periodic tabulation of The New York Stock Exchange from "Fifty Favorite" buyer Monthly Investment Plan shares shall be happy to even the most conservative investment adviser. All alone, people choose the best value of the security for his future hopes rested. No wildcatting here.
A glance at current trade value does not seem to bear this. Action is at a high peak. Three-million-share day at all unusual. It will be seen that the short-term trading rules. Part of this, however, is due to the fact that there are a number of much increased shares outstanding, and partly due to the fact that most trade was conducted with about 12 percent of the lot. Some 88 per cent, in essence, has been withdrawn from circulation and sit on one's safe-deposit box, as an anchor to windward.
Back stop this trend is the institutional investors-insurance companies, mutual funds, personal trust and pension funds, mutual savings bank, college endowments, and foundations-for-profit, all groupings of the money that controls about 16 percent of all registered common-share value. funds are never static. They switch their portfolios constantly. But because, as professionals, they value scale is much like that of other professionals, they have all invested heavily in trading Blue Chips and not capriciously in hopes of finding something better. They're not rocking the boat, either.
Sunny optimism or pessimism of black stock market trends can change overnight. Vision of a few dozen institutions dumping shares in panic-and a significant number of individual investors who follow very worrisome. These markets plunge on news of President Eisenhower's heart attack is one indication of what can happen. Other activities could certainly trigger a similar response, or worse. On the other hand, the market also showed remarkable resilience. It has returned strong after angry respectively. As long as investors maintain a fundamental faith in the American economic prospects, it is possible disasters can be prevented.
It can not be emphasized strongly enough that the operation of the capitalistic system, as reflected in the stock market, it is subtle and sophisticated. Economists are still puzzled by the invisible forces that subject. For investors the problem is compounded by the need, not to explain the past or present evaluation, but to investigate the future in an effort to determine possible benefits. The interaction of human systems and trying to understand the pattern and dimensions in the market who act and react with speed confusing and paralyzing confusion. Only investors who learn to take bearings, and to reduce the various alternatives facing him know in advance what they expect, will come out ahead.
Because historically correct - that the new investors came after the trend has been established.
Stock market
However, the greatest service which can offer new investors is a word of caution. Shares are not magical. There is no guarantee attached, there is no guarantee that if you play the game correctly and study hard and use your head enough prize will be yours automatically.
Behind every stock is a company trying to earn money by selling products people want to have a price beyond the cost of making it. If a product is popular, such as zinc bath, neck horse, trolley car, stove with no fire, or a beautiful Marmon car, all well and good. Not everyone chose so wisely. Some of us are still wondering what happened to whale oil, buffalo robes, silver shoe buckles, and gentlemen's swords.
Every age has a dinosaur and a crowd of people in the confidence that their ride to oblivion. Every age survive act of God or man is angry destroy truth and certainty
Learn how to market. Study the company behind the stock. Invest with caution. Be prepared to make a graceful exit. And foster courage and discrimination. Personal qualities that you bring to the investment will have a considerable effect on the dividends you take out.
Stock market
For many, the decline in the market recently seen disasters. And for some, indeed. Especially, for those who are in pre-retirement age, their wealth building on the success of the stock market. They need their money now, they can not wait for market recovery. Unfortunately, if their eggs are placed in a single basket. As a stock trader, who was looking around, try to learn from the lessons of history is useful, and try to avoid the pitfalls of market deviations. Remember, a normal market trend is up-and-down. Experienced investors can benefit from market trends in both directions. But in bear markets it is more complicated and more risky. If you linger in the stock market, do not worry. If your money is invested is not the last money in your pocket, if you still have time for now that you really really need it, stay calm and consistent. It would appear, and down several times. Get more experience will bring you confidence in the success of your financial investment.
Time is short and we are in the midst of the holiday season, with only 33 days until Christmas. We have seen bricks and mortar retailers and online retailers hurried scramble to get something online. In case you have not seen any retailers in trying to push Christmas, the day after Halloween.
