How To Invest  
How To Investigate Stocks  
Should You Buy Stocks?  
If You're a Widow  
If You're Married, with Children  
If You're Single  
If You're Loaded with Stocks  
If You're Approaching Retirement   
If You're Fifty and Planning for the Future  
The No-Load Funds  
How To Understand the United States Government Market  
How To Buy United States Treasury Securities  
Do Only Suckers Buy Bonds?  
Should You Buy the New Savings Bonds?  
The Do's and Don't's of Real-Estate Syndication  
Should You Speculate in Farm Land?  
Should You Buy Gold?  

How To Invest

When I answer, "I don't know what the stock market is going to do," and when I explain: (1) I don't get many tips and the ones I do get I invariably ignore; (2) I don't clean up and what's more, have absolutely no desire to—well, the mildest reaction is disappointment.

It is true, though, because of my temperament—my emotional attitude toward speculating in the stock market. I don't feel comfortable taking stock tips; I haven't the temperament to be a gambler in Wall Street. I don't clean up because I don't even try to.

But I don't go broke, either.

Without my being particularly aware of it, my activities in the stock market reflect my own personality. And the purpose of this confession is to emphasize to you the vital point that if your aim is to be a serene as well as a successful investor, the first thing you must do is analyze your own personality. That's the key point of a book, How To Live with Your Investments by Linhart Stearns. Most books on investments deal with different types of securities and different investment programs. But Stearns approaches the subject on a personal, psychological basis. His main theme is simply: the right investment for you depends on the kind of person you are. And by the kind of person, he doesn't mean the usual categories of widows, orphans, executives, and so on. He means the kind of personality you represent.

For instance, he comes out with such nuggets as, "It will be well for you to take notice of your prejudices; if you can't over­come them rationally, you had better heed them. You won't be happy with investments that do violence to your emotions." The first step toward an anxiety-free, dollar-and-cents success "is to recognize the motives which impel you to buy common stocks and to differentiate clearly between economic and emotional aims." And this is the equation he offers for an investor's peace of mind:

$ plus P equals Serenity

The "$" stands for all the economic factors in your life. The "P" stands for all the psychological factors, favorable and unfavorable.

How does this apply to you as an investor today or in the future?

• Don't buy stocks because it seems the thing to do. Don't
  be shamed into conforming. In the stock market, this doesn't
  pay off.
• Appreciate your own aims. If your major desire is to main­
  tain a happy position in your own social group, don't take the
  larger risks required to reach a higher status. You'll just make
  yourself anxious.
• Understand the importance of the age factor. A young man
  with several chances to recoup if he gets cleaned out can take
  more risks than an older man in his fifties or sixties.
• As an amateur investor, don't try to compete with the
  professional traders. Trading requires a nimbleness, decisiveness,
  and continuing attention beyond the average investor's scope.
• Do, if you're a deliberate, patient, unexcitable person,
  consider a policy of buying and holding topnotch stocks.
• Make up your mind at the very beginning if you are psy­
  chologically prepared for risks—and don't fool yourself.

Stearns' entire book leads to this rule for the investor: "Know Thyself!"

It is as sound a guide to success in investing as it is to success in everything else.

How To Investigate Stocks

Every time the New York Stock Exchange advertises its warn­ing, "Investigate Before You Invest" in stocks, I'll bet a majority of those who see the ad want to yelp back, "Fine, but how do I go about the investigating?" Let's therefore pull the phrase apart.

To start with I'm making three assumptions: You seriously want guides and you're prepared to work. You want practical rules, not generalities, and will not dismiss a seemingly simple suggestion as a superficial one. You have some savings in stocks now or are accumulating funds to put into stocks over the coming months and years.

Question: What do I do first?

Answer: Before making any move, you must decide what are your objectives in buying stocks. This is fundamental. Is your aim a steady income in dividends every three months? Or is your aim a comparatively high income? Is your aim a handsome profit within a year or two? Or is it the greatest degree of safety?

Each of these is a basic objective, and rarely will you achieve all four aims in one stock. If your aim is a profit fairly quickly, you'll choose a more risky stock than if your aim is greatest safety.

Question: Any other questions I should ask myself?

Answer: Definitely. You must ask and honestly answer whether you have the temperament to investigate an investment thoroughly before you make it, whether you have the emotional stability to be calm when the trend is against you and equally calm when it's with you. You must ask and honestly answer whether you have a steady income and sufficient protection in cash savings or the equivalent to permit you to take the risks inherent in owning stocks.

You might write to the New York Stock Exchange, 11 Wall Street, New York 5, Department "P," for its booklet, "Does It Make Sense for Me To Buy Stocks." It's free and worth reading.

Question: Then what move should I make?

Answer: Find and arrange to deal through a reputable broker. In any fair-sized city there are firms which are members of a registered stock exchange. To get the names, just look in the classified telephone directory under the heading, "Stock Brokers." Check with your bank or the Better Business Bureau on any firm's reliability. Then make a personal visit to a firm you're satisfied is reliable. Tell a representative the facts about your financial setup, explain your aims, and ask for advice.

Another worthwhile free booklet you can get from the New York Stock Exchange is "The Investor's Best Friend and Worst Enemy." (It's the telephone.) The booklet will give you key questions to help you differentiate between a phone call from a legitimate, responsible broker and a high-pressure swindler. Sam­ple: Is he in a hurry? Does he plug one certain stock? If the answer is "yes," be suspicious.

Question: When do I start choosing the investments?

Answer: At this point you're ready to pick an industry or two in which you want to invest to achieve your aims.

Question: How do I choose the right industries and stocks for me?

Answer: Let's assume your aim in investing is capital gains over the next few years and you're only secondarily interested in a steady income. Let's assume that you have heard glowing fore­casts about the business machinery and electronics industries and you decide you want to put your money into companies in these fields.

Go to the broker you have selected and ask him for reports on these industries and a half-dozen representative companies in them. He will gladly give you the research material at no cost. Responsible brokers spend large amounts on research, are con­tinuously collecting pertinent financial facts from their own staff and others.

Now you'll go to work. In these reports you'll get revealing facts on each company's history, financial structure, record of earnings, profits, dividend payments, management, etc. You'll compare the records and gradually cut the list to a company or two for you.

One of the most valuable free booklets the New York Stock Exchange puts out is called "How To Understand Financial Statements, Seven Keys to Value." Officials say the response to this booklet has been astonishing, and I think properly so. It describes in simple language the meaning of such terms as earn­ings per share, dividend payout, and price-earnings multiple, and shows you how to use the "Seven Keys to Value" in appraising securities. Another booklet you might request is "The Language of Investing, a Glossary." It would be a good idea to build up a little library of simply written booklets at home.

Question: Can't I let the broker suggest the stocks?

Answer: Of course, and if you won't or can't do your own investigating, you'll probably accept your broker's advice. If you have chosen your broker wisely, he'll want to preserve your account and keep you satisfied. He'll try to give you the best guidance he can based on facts and his considered judgment.

Question: Is there any other reading I should do?

Answer: You should read a financial section of a daily news­paper to keep up to date on general economic trends and specific industry developments. You also might subscribe to one of the nationally distributed financial magazines. Ask your broker if there are other services he thinks you need and can afford.

Answer: Remember you're not gambling, you're investing. Re­member always that if you buy a speculative stock, you're taking a greater than average risk, and while the industry you select may prosper, your company may flounder or go bankrupt. If you want to hold the risks of investment to a minimum, concentrate on the shares of established, prosperous companies—certainly until you feel you know your way around. The more you investigate, the more you'll learn about the art of investigating and the art of investing.

Should You Buy Stocks?

Back in April 1957, I assumed the role of each of seven typical Americans—a young married man, a bachelor, a widow, a sixty-five-year-old, for example—and called on the top research partners Merrill Lynch, Pierce, Fenner & Smith, one of the world's largest stock brokerage firms to ask questions each of these individuals might ask about his financial affairs. I gave the partners "my" problems in each case, received specific advice and lists of securities the firm considered suitable for "me" in each of my roles.

The result was a series of reports which I felt had some value at the time and which I therefore wanted to bring up to date to include in this book. With that in mind, I again called on the firm to ask what changes the executives would like to make in their advice, particularly in view of the sharpness of some of the price swings in both the stock and bond markets since 1957.

The answer was startling—and I quote verbatim:

This may surprise you, my dear Sylvia, but we would like to leave your columns of April, 1957, the way you wrote them. We are in the brokerage business on a long-term basis. In fairness to your readers and in complete honesty to ourselves, we would prefer to stand by our original portfolios.

Please understand that some red hot speculators and nouveau riche financiers may think our selections were quite mundane. But as our partners said and repeated, the average investor should have " a sound, sensible program." And we think the points you made are as true today as when you wrote them almost four years ago.

So here are the original reports. Following them, you'll find the recommended portfolios brought up to date in terms of total dollars as of early 1961. Remember as you read the reports, however, these points about our economy, the stock market, and the outlook that are absolutely fundamental today. For your own welfare, it is imperative that you know them and under­stand their significance:

• There no longer is a "stock market" in which nearly all
  stocks go up or down simultaneously and there well may never
  be again. You can be badly misled if you judge what is happen-­
  ing to stocks by what is happening to the familiar stock averages.
  Primarily because buyers of stocks are much more educated and
  sophisticated than ever before, during any week or month, many
  stocks will be in a "bull" market, many others will be in a "bear"
  market.
• During the past twenty-five years, fluctuations in stocks on average have been getting smaller and smaller. A major reason for this increasing stability is that America's great institutions, such as life insurance companies, investment trusts, and pension funds, have become major buyers and owners of stocks and these informed investors don't panic easily. They will become even more important investors as the years roll on and their buying will be a cushion under the market.
• At the same time, some forces which contributed to the
  upsurge in stock prices in the 1950s have lost power.
• The long-term trend of stock prices is upward and since
  the close of the last century the rise has averaged 3 per cent a
  year.

If You're a Widow

You're a widow in your early fifties. You own a modest house on which the mortgage is next to nothing. Your two children are now adults and you need not support them, but they're in no position to support you either, and anyway you want to be inde­pendent. Your husband's life insurance, which you have just received, and your savings total $40,000. And unless you sell your house, this is it, your total nest egg.

Now that the first shock of your husband's death has faded, you are facing up to the problem of investing this nest egg. Through a friend, you have met Winthrop Smith, head of Merrill Lynch, Pierce, Fenner & Smith. You're in Mr. Smith's office and he and his top research partners are talking to you frankly. . . .

you: I must earn some income on this $40,000, but I don't dare take chances. I can't afford to risk losing the money. How much can I earn on this $40,000 without taking much risk?

mr. smith: Today, you could invest it safely to earn slightly over 4 per cent a year for you, or from $1,600 to $1,700 a year. Of course, you would have to file an income-tax return and prob­ably pay a small tax on these earnings.

you: But I can't live on that! I must earn more.

mr. smith: You said you can't afford to risk losing the money and I absolutely agree you should be careful. You can't be con­servative and earn more on average than the percentage I've mentioned. And since you have no business experience whatso­ever, I would strongly advise you against trying to earn a lot more by putting this cash into a business venture. You could lose your entire capital too easily if you try this.

you: How should I invest the $40,000? Should I put at least part of it in United States bonds? Or should I put it all in stocks?

mr. smith: In your position, you should not buy United States government bonds because you need the maximum income you can safely earn. You can get the protection you need in other top-grade securities and earn more. We also think you should not put your whole capital in stocks; that's not sufficiently con­servative, considering your problem.

A proper, safe division would be this: Put about 40 per cent of your money in good corporation bonds; put the balance of 60 per cent in top-grade preferred and common stocks. That's a division that will prove sound through the years and you can diversify your securities.

mr. smith: Certainly, and any other responsible stock house can give you a suitable list of securities, too. If I were you, I would divide my $40,000 this way:

you: And now what? How am I going to get the rest of the income I need to live on?

mr. smith: Your husband and you should have thought of this long ago. I hope your experience will help other couples realize they must plan for catastrophe, and the earlier an investment program is started, the better. Now, you're up against it. If you don't want to depend on your children, my frank suggestions are: Get a job or try to remarry. One of the best investments you—and any widow in your spot—can make is in a new ward­robe. Eliminate one of those stock investments, buy new clothes, and go look for a husband. Get training for a job because you might find your husband as well as earn your extra money on the job.

you: This is the wisest advice you can give me?

mr. smith: Yes. We cannot work miracles for you. But your $40,000 will be safe, you'll earn a basic amount from it each year, and over the years your nest egg will grow larger as stock prices rise. You won't double or triple your capital quickly but you won't lose it either.

If You're Married, with Children

You're a man in your forties with a wife and two young chil­dren. You are a skilled worker, have a secure job paying you about $9,000 a year. When you were married eleven years ago, both you and your wife had some savings, and since then you have managed not only to build a good equity in your home but also to build your nest egg in cash and United States Savings Bonds to $6,500. You have about $20,000 in life insurance.

With the help of your frugal wife, you're now saving twenty dollars a week, of which you're putting five dollars in United States bonds and fifteen dollars in the bank. And you're wonder­ing whether it's time you shifted to buying stocks.

you: Should I buy stocks at today's prices?

mr. smith: Before you buy any stocks, you should add to your life insurance, for if you were to die suddenly, that $20,000 would be woefully inadequate protection for your wife and youngsters. Buy at least another $10,000 of straight ordinary life insurance, not for savings purposes but for protection of your family.

you: I see the sense of that. Then what should I do?

mr. smith: For your own welfare and peace of mind, you should always have a basic nest egg in cash and United States Savings Bonds and ideally, this should equal at least six months' income. Under no circumstances, therefore, should you switch your entire nest egg into stocks and don't let anyone talk you into that. However, you might properly take part of it and invest it in stocks. It's certainly time for you to start creating an invest­ment portfolio that will give you income and profits over the years.

Because you tell me your wife is so frugal and excellent a man­ager and because you're young and healthy and have a secure job, I'd say you could safely take $3,000 of that $6,500 nest egg and invest it in good common stocks right now.

mr. smith: By "good" I mean stocks of well-established, national companies in essential industries—such as well-established utility, chemical, electrical equipment companies. At your age and in your circumstances, you can afford to be less conservative than the widow to whom I spoke and to buy what we call "growth" stocks.

you: Can you give me a list?

mr. smith: There are plenty of stocks listed on the New York Stock Exchange that would be suitable for you. I'll pick out a few.

Continental Can . . . Dow Chemical . . . General Electric . . . United Gas Corporation ... Safeway Stores... RCA ... Northern Pacific . . . Sears Roebuck . . . Standard Oil of California. . . .

you: And I'll earn on these?

mr. smith: Yes. Roughly 4 per cent a year in dividends and over the years your investments should grow steadily in value. Since you don't need the income from these investments now, I urge you to reinvest the dividends as you receive them so the money you earn will in turn earn more for you. It's wonderful the way a nest egg grows when you do this.

you: Now what about the twenty dollars I'm saving every week?

mr. smith: Keep putting that five dollars of it in United States Savings Bonds through your company's payroll deduction plan and let this saving swell your basic nest egg. As for the rest, let your frugal wife take over and accumulate the fifteen dollars each week until you have at least $500.00 and then buy shares in any of the companies I've just mentioned. Then accumulate another $500.00 and invest it again. Continue doing this and you won't have to fret about whether stock prices are high or low for the price you pay will "average" out; if prices rise, your $500.00 will buy fewer shares, and if they fall, your $500.00 will buy more shares. Don't buy stocks in bits and pieces, though, for it's simply too expensive for you.

you: So it's wise for me to go ahead and start buying stocks now?

mr. smith: Yes, and once you've decided on a program, stick to it. And as your earnings rise, increase your investments.

You're single, young, have a steady job which pays you enough to live comfortably and still save forty dollars a month. You have been putting $18.75 into a United States Savings Bond every month and the balance from time to time in your account at the corner bank.

Your family doesn't need your financial help, you're due for a raise and will be able to save more—and so you're wondering whether just keeping your savings in cash and United States bonds is a wise program for you.

you: What should I do now?

mr. smith: Continue buying your savings bonds until your emergency nest egg in cash and bonds equals six months' income. You'll reach that figure soon and at that point, there's absolutely no reason why you should not begin creating a portfolio of good stocks that will grow in value over the years. I strongly advise you to do so.

you: What about putting my money in life insurance?

mr. smith: Young man, you certainly should do this as soon as you marry. Now, though, you need not emphasize life insurance. Incidentally, if a single woman in your setup were sitting in your chair now, I'd say she could ignore this life insurance aspect al­together.

you: Okay, beginning June 1, I'll have forty dollars a month to invest. How do I go about it?

mr. smith: For you, the Monthly Investment Plan, originated by the New York Stock Exchange, is made to order, for under this method of systematic saving and systematic investing you can buy from $40 to $999 of stock every month or every three months. All you do is decide how much you want to invest at regular periods, sign up for an M.I.P. plan, and tell your broker what stock or stocks you want to buy. Your securities will be bought at the regular dates and as you receive dividends, they'll be automatically reinvested for you. On purchases of $100 or less your broker will charge you 6 per cent commission; on over $100, the fee will be $3.00 plus 1 per cent but not less than $6.00.

you: Isn't that awfully expensive?

mr. smith: Yes, on small stock purchases commissions are high. But this plan will discipline you into regular investing and that is a great advantage. Over the years you'll be amazed how your stock fund will grow in size and in value.

Incidentally, I have my own Monthly Investment Plan and I assure you I buy in bigger amounts than forty dollars a month. I'm a professional in this field and I am convinced systematic buying of stocks—so that your costs average out—is the soundest of all investing methods.

you: What stocks might I properly consider?

mr. smith: The top favorites of the 56,000 M.I.P. accounts now in force are General Electric, General Motors, Dow Chemical, Standard Oil of New Jersey, and Sperry-Rand. I think you might also consider the same stocks I mentioned to the young married man—Continental Can, United Gas Corporation, Safeway Stores, RCA. . . . And there are many others which are the right type for you—as an illustration, Eastman Kodak, Caterpillar Tractor. . . . These are top companies which are growing and that's what you should buy.

you: With only forty dollars a month to invest, should I just pick out one stock or should I buy a little of several?

mr. smith: Pick out one and buy up to $1,000 of it; then shift to another and buy up to $1,000. And I urge you not to interrupt your buying program except in a real emergency.

you: But what if the stock market goes into a tailspin?

mr. smith: For you, it would be a good thing if stock prices did go down because you'd be able to buy more shares for your money. I believe any time is the right time to buy, assuming you buy good stocks. And if you accumulate a big profit, don't be tempted to take it. You're not speculating, young man. You're building for the long term.

If You're Loaded with Stocks

You're a businessman and you're "loaded" with stocks which you started buying in 1954. Out of your list of eleven stocks, you have a fine paper profit on four, a moderate profit on three, and on the rest—well, on these, so far your judgment hasn't been too good.

Today, you're worried. You don't like the way things are going in your own business and you think trouble could spread. You don't like the way the stock market has been acting and you're wondering if stocks are heading for a real shakeout. You're just not sleeping well.

you: If you were me, would you hold or sell?

mr. smith: I wouldn't be in your spot to start with. No one should be 100 per cent invested in the stock market at any time. Even if you're convinced stock prices are going to skyrocket, you shouldn't bet that heavily on your judgment, for any number of unexpected developments could upset your calculations.

I've been in Wall Street forty-two years, and I can't tell you today whether the stock market is too high or too low and I don't believe anyone else knows whether it is either.

you: Then I should sell?

mr. smith: Certainly cut your stock holdings by at least 15 per cent and quite probably more. I would tell your employees that they always should have a basic nest egg in cash and United States bonds, and what applies to them applies to you. Get rid of a few of your weakest stocks and when you get the cash, put it in the bank or United States bonds. Sell the weakest stocks on your list regardless of what you paid for them.

you: How do I tell which are the weakest? Are these the stocks on which I now have a loss?

mr. smith: Not necessarily at all. Stocks now selling below your purchase price might be way up four or five years from now. As you know, since 1955, the stock market generally hasn't made much headway, and that's one of the reasons many professional investors are cautious. Ask your broker—and the firm you are dealing with is an established, responsible one—for an appraisal of your holdings and suggestions on which to sell. You'll get this advice absolutely free.

you: And I should keep the rest of my stocks?

mr. smith: Maybe the stock market will be lower next month or next year and maybe not. But over any long period of time, the stock market is going up and you'll benefit from a sound list of securities.

you: What makes you so sure the market's trend is up?

mr. smith: Because it always has been. And the rise during this century has averaged 3 per cent a year. Incidentally, a recent study of stock prices during the past eighty-six years by Hugh W. Long & Co. of New Jersey showed that stock prices have increased not only in nine out of ten long-term periods of inflation but, sur­prisingly enough, also have increased in eight out of ten prolonged periods of deflation.

you: What about buying mutual funds when I invest again?

mr. smith: When you buy shares of mutual funds, you do get the advantages of a diversified list of securities, professional man­agement and supervision—which explains the phenomenal growth of mutual funds since 1940. But you pay a commission when you buy and a management fee for these advantages and since there are now 250 mutual funds you can buy, you must shop around for these, too. Some funds are conservative, some balanced, some speculative, some have better records than others, some are less expensive than others, and so forth.

you: You're really telling me not to worry so much?

mr. smith: Of course, you can't just buy stocks and put them away. You must check and watch. But if you get your list analyzed, build up a basic cash position, stop trying to outguess the market's trend from month to month, you'll come out well ahead.

If You're Approaching Retirement

You will be sixty-five soon and will be retiring from your job. You would prefer not to but since your company has a compulsory retirement policy, you and your wife have decided that when the time comes you're going to sell your house—which you own free and clear—move to a community in Florida, rent a small place, and live out your senior years as comfortably and happily as you can.

This you figure you can do if you can supplement your company pension and social security by $2,200 a year. Your problem is now to earn this income by investing the $22,000 a real-estate agent says you can easily net after taxes from your house and the $13,000 you have in the bank and savings bonds. (Your children are mar­ried and have babies and you don't want to impose on them.)

you: I've heard about a sensational stock from a man I work with. It's a stock of a new company which he says is going to make millions out of one of those new wonder metals. He's buying it and he's sure that if I do, I'll double my money in no time. I'd like to buy it.

mr. smith: You couldn't be more wrong! You're one of the last persons who should speculate in stocks of this type, and in this instance, you're doing more than speculating; you're gambling. Your friend is advising you in good faith, but he doesn't realize how easily you could be completely wiped out. What's more, despite all the laws and rules devised to protect little investors since the twenties, crooks are operating in stocks today more actively than they have in years and you could be swindled out of your precious savings. Your aim is to preserve your capital, not to risk losing it.

you: Then what should I do?

mr. smith: In your position, I think you should buy a selection of high-caliber bonds. On the total $35,000 you have to invest, you can earn well over 4 per cent a year. Here's a sample list that will cost you under $35,000 and give you an income of $1,430 a year. And at your age, your exemptions will eliminate your income tax on these earnings.

you: Are you telling me not to buy any stocks?

mr. smith: You could buy some conservative stocks, such as American Telephone, on which you would earn 5 per cent a year. But I would rather have you substitute a convertible bond or two for a couple on our list if you want the possibility of profit on stocks as well as the benefits of safety. Your broker will suggest convertible bonds suitable for you.

you: I'm embarrassed to admit it, but you're the first broker I've ever spoken to. How do I go about opening a brokerage account?

mr. smith i It's as simple as opening a charge account at a department store. First, make sure you select a responsible stock firm—and if you have any doubts, ask your banker for guidance. Then visit its office and see a representative of the firm. You'll fill out a form on which you'll give the same essential facts you would give in opening a charge account. And that's all there is to it.

you: If I buy the list of bonds you suggest, I'll still not have enough to meet my minimum requirements. I'll need another $700.00 a year.

mr. smith: Without involving you in risks that at your age you should not take, I cannot in good faith recommend securities on which you can earn another $700.00 a year. To get the extra amount, I think you should take a part-time job and I think it'll bring you satisfaction as well as money. You should look into the opportunities before you move to Florida.

you: Any further advice for me?

mr. smith: Yes. Wherever you go, arrange to have your securities checked every six months so you'll know if you should make any changes. And above all, don't let any one talk you into switching into speculative securities to earn some extra dollars. This is not for you!

If You're Fifty and Planning for the Future

Now you—the professional man just turned fifty and into the best earning years of your life—are getting your chance to discuss your investment program. You're earning $22,000 a year and you're going to earn more. You have a $30,000 house on which you're paying off the mortgage monthly. You have sufficient life insurance and a big enough emergency fund in cash and United States bonds to give your wife and two college-age children basic protection in case something happens to you. You also have some stocks, including such sound ones as American Telephone, General Motors, and du Pont, and you have some real "dogs" you bought on get-rich-quick tips. You don't even know how to figure the value of a few of these.

you: I've learned the hard way how to avoid making mistakes in the stock market and now I'm ready to follow a sound, sensible program. I have my list of stocks. I'm able to save $180.00 a month now even after taxes, and when my son graduates from college next year, I'll be able to save a lot more.

mr. smith: Before you do a thing, you should have your stock list thoroughly reviewed by your broker to find out its value and what stocks you should hold, what you should sell. There's no reason you should continue holding your junk stocks in the hope they'll turn out good after all. Take your losses, get out of your junk, get your list into balance.

you: Okay. If I do sell the junk stocks, I'll have about the same amount of dollars invested in each stock I have left. Is that sound?

mr. smith: Definitely so. And you'll have a sound list on which to build. You're relatively young, you have at least fifteen years of good earnings ahead of you and you can afford to take a "businessman's risk."

Put aside your $180.00 a month until you have accumulated $1,000 or so. Invest that total in a "businessman's risk" stock and keep doing this twice a year. As your savings rise, increase your regular systematic twice-a-year investing.

you: What do you mean by a "businessman's risk" stock?

mr. smith: It's a stock which usually involves more risk and may fluctuate more widely than a conservative security. But it also offers a chance of better-than-average income and profit over the years. For instance, in this class I'd put such stocks as Babcock & Wilcox, Pepsi-Cola, Sinclair Oil, U.S. Steel, Southern Railway, and American Airlines. You can get a long list of such stocks.

you: Can't I get stocks with a little more "romance"?

mr. smith: If you mean by this stocks which are more specula­tive, yes, you can. And you're in a position where you might take more risks if you wish. But be sure you get professional advice from a responsible broker on this. Don't repeat your mistakes. Don't take tips from strangers.

you: What might I expect a good list of businessman's risk and growth stocks to do for me before I reach retirement age?

mr. smith: Past performance is no guarantee of future action, but here is a sample of how growth stocks grow. Assume you had invested $1,000 on January 2,1939, in each of the following stocks and had reinvested the dividends at the start of each year after received: Your $1,000 of Boeing Airplane would be worth $21,000. Your $1,000 of Caterpillar Tractor would be worth $19,000. Your $1,000 of Eastman Kodak would be worth $8,500 ... of Eastern Air Lines, $12,000 ... of Thompson Products, $32,000.

By the way, you could properly buy any of these stocks too.

you: As a professional man, I find it hard to concentrate on financial matters. Should I try to get an investment counselor?

mr. smith: There are some excellent ones, and if having this sort of special attention will give you more peace of mind and if you're willing to pay the fee asked, by all means go ahead. Many wealthy people prefer not to have any responsibility of managing their own money, and for them, a good investment counselor is ideal.

How would "I" in my typical roles have made out by following the advice outlined in the preceding pages? With no consideration given to cash dividends and small stock dividends, this is how each individual's portfolio shaped up in early 1961.

The married man with children had a profit of 38 per cent. The single fellow had a profit of 17 per cent. The man approach­ing retirement had a nominal profit while the professional man of fifty planning for the future had gains of 24 per cent. Even the widow's portfolio showed a modest rise—from $39,850 to $41,630. This, despite the fact that, as an executive of the firm put it, "we would prefer to forget (but cannot) a selection like United Fruit. . . ."

The "No-Load" Funds

As you read this, salesmen are roaming all over the country promoting ownership of mutual shares on which the total sales charge to you ranges in most cases from 6 to 9 per cent and averages around 8 per cent. In simple dollar terms, this means that when you put $1,000 into a typical mutual fund, you get $920.00 worth of securities. The other $80.00 is the so-called "load."

Obviously, millions of Americans are willing to pay this charge to get the advantage of mutual funds—diversification of securities, professional management, constant supervision. In two decades the mutual fund industry has grown to the point where today over two million investors have more than sixteen billion dollars in 250 funds.

But among these 250 funds are a couple of dozen or so which no salesman promotes, for the simple reason that he gets no com­mission whatsoever if he sells their shares. These are the so-called "no-load" funds, meaning that when you put $1,000 into their shares, you get $1,000 worth of securities. Nothing is absorbed in sales charge.

Since these funds are virtually unknown, here, in question-and-answer form, are facts which you well may find of practical value.

What's the sense in having a mutual fund if it offers its shares at absolute cost? How can the fund exist?

The key answer is that all mutual funds, including the no-loads, charge a management fee averaging around ½ of 1 per cent a year of the total assets of the fund. This can run into big-time money when the fund reaches the multimillion-dollar level. Also, the no-load fund has no sales organization to support.

How does the performance of the no-load compare with the record of the typical load funds?

Over the past year and decade, their record in many cases is as good or better than the load funds.

Aren't there any disadvantages to buying them?

Sure. There aren't many to choose from, and thus you may not find one with precisely the same investment objectives as yours. Basically, how you make out owning mutual fund shares depends on management, and if the management of a load fund is superior to a no-load fund that 8 per cent charge easily can be overcome. And while the small size of a no-load fund may give it greater flexibility in the market, a big fund may be able to spend more on vital research.

Where do you find the lists of the no-load funds?

That's the catch. Since they're not "sold," they're hard to find. Here's an alphabetical list of those with assets of more than five million dollars: de Vegh Investing; Dodge & Cox; Energy Fund; Guardian Mutual; Haydock Fund; Johnston Mutual; Loomis-Sayles; Penn Square; T. Rowe Price Growth Stock; Rittenhouse Fund; Scudder, Stevens & Clark Common Stock Fund; Scudder, Stevens and Clark Fund; Stein Roe & Farnham Balanced Fund; Stein Roe & Farnham Stock Fund.

Ask your local banker for more information. Check a mutual fund directory for addresses and performance records. A superb source of information is Investment Companies, put out by Arthur Wiesenberger and Co., the bible of the mutual fund industry.

How To Understand the United States Government Market

In all history never has there been so much public debate over the intricacies of government finance as today. The United States Government securities market, the discount rate, the prime rate, monetary policy, tight money—you wouldn't have heard these words outside of a limited group of experts until a short while ago.

But the bafflegab of government finance is rough stuff. Senators complain about rising interest rates on new United States bonds when they don't mean "bonds" at all. Reporters write about the Treasury's "tight" money policy when it actually isn't the Treas­ury's policy at all. This dictionary should help you get around the labyrinth of phraseology without stumbling.

THE UNITED STATES GOVERNMENT SECURITIES MARKET:

This is the greatest and biggest securities market in the world—a market in which billions of dollars of the marketable securities of the United States Treasury change hands on any ordinary business day. While many United States securities are listed on the New York Stock Exchange, this is not where the trading takes place; the real Government securities market is over the counter and is dominated by a handful of major dealers and a few large banks.

There are several types of United States Government market­able securities, a fact which is not generally realized. There are United States Treasury bills, certificates, notes, and bonds, and you can buy them.

To be specific, you can buy United States Treasury bills in the market. A United States bill is a security which when issued by the Treasury has a maturity of one year or less. It always is issued at a discount from the price at which it will be paid off at maturity, the maturity price being one hundred cents on the dollar or par. The difference between the price at which you buy a bill—the discount—and the price you receive when the bill matures or you sell it is the income you get on the bill.

Every week, the Treasury regularly offers bills due in 91 days and in 182 days. From time to time, it issues special bills which the buyer may use to pay income taxes and bills due in one year.

You cannot buy bills in amounts less than $1,000.

You can buy United States Treasury certificates in the market.

You cannot buy certificates in amounts less than $1,000.

You can buy United States Treasury notes in the market.

A United States note is a security which when issued has a maturity of longer than one year but shorter than five years. A note usually is issued at $100 or thereabouts and carries coupons giving the holder a specified rate of interest return payable semiannually.

The "Magic Fives" the Treasury sold in October 1959 were notes. They carry a 5 per cent coupon, are due in 1964, and every six months the owner gets $25.00 per $1,000 of notes he holds.

You can buy United States Treasury bonds in the market.

A United States bond is a security which when issued has a maturity of more than five years. A bond usually is issued at par or thereabouts and it always carries coupons giving the buyer his interest semiannually.

You can buy most United States bonds in denominations as low as $500.00.

If and when you decide to buy United States securities, tell your banker or broker exactly what type of issue and maturity date you prefer.

There are tens of billions of dollars of outstanding United States securities; new bills are being issued each week; new certificates and notes come out periodically through the year; and recently the Treasury has been issuing new high-coupon bonds too.

There also are United States Government nonmarketable securities.

These are mostly the familiar savings bonds. They are non-marketable, meaning they cannot be traded or transferred. You don't "sell" savings bonds; you redeem them. And you need not worry about what's happening to the prices of marketable United States securities, for when you redeem a savings bond, you always get back what you paid—plus any interest due you.

It is the market for marketable United States Government securities which is the basic bond market of our land. It is the price trend in this market which vitally affects the price trends in all other bond markets—the markets for corporate securities and for municipal bonds. It is through its operations primarily in United States Treasury bills (see definition above) that the Federal Reserve System—our central bank—operates to add to or cut down on the supply of money in our country.

And it is through its operations in this market that the Fed­eral Reserve System influences trends of interest rates and signals its informed opinion on the over-all economic outlook. Once you grasp the magnitude and significance of the United States Gov­ernment market, you're well on your way through the labyrinth of government finance and to understanding the phrases which follow.

united states monetary policy: In our country, the central bank is called the Federal Reserve System. It has the crucial power to create money. By its operations in the United States Govern­ment market the Federal Reserve System can add to the funds the nation's banks have to lend and invest, or it can contract the funds the nation's banks have to lend and invest. Thus, it can help keep the growth in our country's money supply at a pace it deems proper.

This is one of the major weapons of monetary policy. It represents the decision of the policy-making authorities in the Federal Reserve System on the amount of money and credit the economy needs to operate at a high and stable level of prosperity. During World War II and the first postwar years, the Federal Reserve System's freedom to make decisions on how much credit should be available was rigidly limited, but it is now operating with a tremendous amount of independence.

The Federal Reserve System acted to pour billions of dollars of funds into the banking system in order to encourage banks to make loans at progressively cheaper interest rates. Its aim was to help combat the developing recession of those months and it freely and suc­cessfully used monetary policy for that purpose.

From mid-i958 through the end of 1959, the Federal Reserve System stepped harder and harder on the credit brakes, geared policy toward curbing the expansion of loans and toward sending borrowing costs to the highest levels in over a quarter century. Its aim was to control inflationary forces during the recovery from the 1958 recession and to achieve this aim, it helped bring about the "tightest money" era this generation has known.

Since early 1960 and to this writing, the Federal Reserve Sys­tem again has been easing up on credit, has been expanding the amount of funds available for loans in the banking system, and pushing down borrowing costs. Its aim has been to put new vigor into a sluggish economy.

In theory the Federal Reserve System can openly defy the President on monetary policy—and during President Truman's Administration is actually did so. Unless or until the law is changed, the Federal Reserve System is answerable only to Congress.

How To Buy United States Treasury Securities

Let's be cold-blooded about it. When the United States Treasury is compelled, by rising interest rates and the scarcity of money, to pay a high rate of interest on a short-term IOU, any investor, small or big, with funds he wants to put into a safe place for a limited amount of time ought to be attracted.

How do you go about buying this sort of United States obliga­tion when interest rates go up? How do you buy any one of the many United States Treasury securities trading every day in the great New York market?

Before I give you an answer, a simple guide is in order.

Don't even bother to try to buy these securities unless you have at least $1,000 to invest—and to be absolutely honest about it, you should have at least $10,000 to make it worth-while. The Treasury doesn't offer its short-term marketable securities in denominations under $1,000. Banks, dealers, and brokers don't want to handle orders under $10,000 or so because they can't make money on transactions of this size. As for you, the differ­ence between what you can get on a savings account and on United States Treasury issues doesn't amount to much on a small amount.

But assume you have a hefty nest egg of cash you want to put away for several months in United States securities.

• Go to your bank—the commercial bank with which you
  have a checking account—and ask an appropriate officer to buy
  you a short-term United States security (which will be called
  a bill, certificate, or note) due around the date you prefer in
  1961, 1962, 1963, etc. If your bank's aim is to give you Grade
  A service, you'll have no trouble buying your securities, although you may be charged an extra fee because of the small size of your purchase. If your bank officer pleads ignorance about the mechanics of the purchase, go over his head to a top-chelon man. Any informed banker should want to encourage you to buy.
• Or go to your broker and ask him to buy the short-term
  securities for you. He, too, should be able to put through the
  transaction quickly or should be able to get information fast.

If this answer seems a bit tentative, there is an excellent ex­planation. Since the twenties, the United States Government securities market has been the province of the big investor and the whole mechanism of the market has been geared to him. The little investor has stuck to United States Savings Bonds. Recently, though, the interest rates on short-term United States issues frequently have been sufficiently attractive to warrant your at­tention, too. There is no reason why the Treasury should not be paying the rates to small investors willing to lend thousands as well as to the giants willing to lend millions.

Do Only Suckers Buy Bonds?

If I were in charge of promoting the sale of United States Savings Bonds today, I'd ask one of the country's top artists to draw me a cartoon. It would show an animated United States Savings Bond with some old scars on "his" battered face bowing low to an animated stock market with some new bruises on "his" furrowed brow. The caption would indicate Mr. United States Savings Bond as saying: "Thank you, Wall Street, for reminding me of my own strength."

Then I'd send reproductions of this cartoon to the paid and volunteer salesmen of United States Savings Bonds all over the country and I'd urge them to publicize its implications as widely as they could. For nothing underlines so clearly why these bonds or their equivalent—meaning cash in a savings account—should be basic in every American's nest egg as the hammering even the most respectable common stocks have taken in recent months.

It has become the popular thing in the last several years to condemn United States Savings Bonds as a most unattractive security and to ridicule the millions of us who own and buy them regularly as suckers.

Say the critics: Face up to the fact that any buyer of savings bonds in past years has lost out because the dollar's buying power has been slashed. The bond you bought at $18.75 in 1953is now redeemable at $25.00, but your $25.00 buys much less than it would have eight years ago.

Say I: No doubt about it, the rise in prices has cut into the dollar's value. But why single out savings bonds for condemna­tion? The same thing has happened to dollars put into the bank or into life insurance. Are savings accounts and insurance to be condemned too?

Say the critics: You can get a bigger interest return on dollars placed in many savings associations. The United States is being stingy.

Say the critics: Forget savings bonds and protect yourself against rising prices through stocks, which will give you more return and also a profit.

Say I: That's a half-truth, even though after you have a basic nest egg, I'm all in favor of diversifying your investments. But as millions who have bought stocks in the last couple of years are well aware, stocks go down as well as up. You may have to sell at the worst time for you. Savings bonds are riskless.

The Treasury may have a rough time answering its savings bond critics in dramatic terms. But the interest paid on savings bonds isn't the key attraction to those of us who buy them. The fact that we can't make a profit on the investment isn't signif­icant to us. What is important is that we cannot lose a penny of our initial investment and we can get back every cent on our demand. In terms of dollars, we have absolute safety and what the experts call top "liquidity."

For many years, I have been buying high-grade stocks to get a moderate income and to make a modest profit over the long term. For many years, I also have been buying savings bonds regularly to discipline myself into consistent saving and to keep my basic nest egg up to proportion. You saw on page 44 what happened when my husband and I stopped.

Should You Buy the New Savings Bonds?

Should you buy and continue to hold United States Savings Bonds now that the interest payment you can earn is 3.75 per cent instead of 3.25 per cent a year on the bonds, if you hold them to maturity date? It's a question that has been asked in millions of homes and it's one that should be answered not in generalities but in the most practical bread-and-butter terms to you.

In briefest summary, the key change made in the savings bond program is that the time you must hold a bond for which you pay $75.00 to get back $100.00 has been shortened. If you buy a bond for $75.00 today and keep it to its new maturity in seven years, nine months, you'll get $100.00—which works out to an annual rate of interest of 3.75 per cent. If you hold it only three years, you'll get back $82.64, which works out to an annual return of 3.26 per cent. If you hold it six years, you'll get back $93.28, which works out to an annual payment of 3.67per cent. Bonds which you bought in the past anticipating a return of 3.25 per cent a year also will earn 0.5 per cent more if you hold onto them.

Now to the practical answers:

First, let's look coldly at the 3.75 per cent rate since that's the new angle. Against today's interest rate structure and eco­nomic background, this appears a reasonable annual return. Over the next eight years, surely the cost of living will not rise at anything like this annual rate. Barring a world cataclysm—in which case, it won't matter where you've put your savings—we're in no danger of a runaway inflation. Moreover, while you must pay a tax on the interest you earn, in most instances the income tax won't bite much. In short, a 3.75 per cent annual rate should more than protect the value of the dollars you save via these bonds. You won't come out spectacularly ahead but you should come out nicely ahead.

Second, the great advantage of buying savings bonds under a payroll savings plan is that the deductions from your paycheck discipline you into saving small amounts regularly, and over the years small amounts regularly saved become big amounts. You may have the best of intentions of earmarking a specific sum on your own out of your paycheck, but a lot can happen to your best intentions between the time you get the paycheck and the time the little chunk goes into your savings. The payroll deduc­tion has the virtue of protecting you against yourself.

Third, every family should have a basic nest egg, consisting of cash or its equivalent and life insurance. No matter how in­trigued you are by other forms of investment, you should create this nest egg first for your financial peace of mind and use in emergencies. Savings bonds—which are cash plus interest—belong in this reserve.

Fourth, savings bonds are absolutely riskless, a mighty comfort­ing thought. Admittedly you can earn more than 3.75 per cent a year on other United States Government securities at this writing and on other bonds, but these securities haven't the unique, nonmarketable feature of the United States Savings Bond. After you've held a savings bond two months, you can turn it in at your will, get back at least what you paid plus the interest due. You cannot lose a dollar that you put away in savings bonds and I repeat, that 3.75 per cent yearly rate should protect your dollar's buying power, too.

Fifth, when you buy United States Savings Bonds, you con­tribute toward the sound management of the public debt, and thus you directly help preserve the value of the dollars you are earning and saving. While this is a generality, it is a vital one.

Should you, then, buy and hold savings bonds in your basic nest egg? In view of the new interest rate scale and the outlook for the dollar's value in coming years—yes.

The "Do's" and "Don't’s” of Real-Estate Syndication

A major method for mass financing of real-estate ventures and an important new medium for both professional and amateur investors is the real-estate syndicate—a group of investors who pool their funds for the purchase of income-producing properties and who, once they have put up their cash, become limited part­ners owning participating interests or units in the properties.

Until only about five years ago, the typical real-estate syndicate was a private, intimate affair. A group of professionals in real estate would come across a property too expensive for any one of them but within their means if they combined. So, twenty-five or thirty close associates would form an informal partnership and put up the money to acquire the property. They often took big risks—just as often made big money.

In the past few years, though, the real-estate syndicate has gone "public." Now, experts in the field will find a deal, arrange for the best mortgage financing, and set up the operation for maximum tax advantage. Then the expert will add his own ex­penses and a profit for himself to arrive at a selling price. When he has that price, he will split it up into units of say, $5,000 or $10,000, and offer the units to the public.

Ownership of real estate through syndicates is climbing at the rate of $3,000,000,000 a year, it is estimated, and real estate already owned by syndicates is calculated at a huge $9,000,000,000.

As the field has burgeoned, though, the fringe operators have moved in too, and this is a development which terrifies responsible leaders. Smooth promoters have played up the 10 to 12 per cent annual distributions but have ducked away from full disclosure of the details. For instance, they have neglected to make clear how much of the annual distribution includes tax-free return of invested capital and how much is classified as taxable earnings on the investment. And they have played down the fact that units in a real-estate syndicate are not nearly as liquid—easily marketable—as shares of a corporation stock listed on a stock exchange.

Thus, for your protection, here are "do's and don't's" for you, the average investor.

do insist on a written prospectus or brochure disclosing all the key facts about the deal, including a full description of the property, a statement of estimated income and expenses, the com­plete story on financial obligations of the property when bought by the syndicate.

do get satisfactory facts about the identities and experience of all involved in the management of the syndicate's operations.

do fully understand that the high annual distributions you get on your investment include a yearly return of your capital as well as earnings on your investment.

do be sure that the prospectus for the syndication has been registered with the Securities and Exchange Commission.

don't be tempted by promises of very high returns on more speculative real-estate investments. These are strictly for the sophisticate who is qualified to judge and can gamble on risks.

don't get involved in a syndication from which you can't get out without tremendous red tape. Transfer of your shares in a real-estate deal should be almost as easy as transfer of shares of stock.

don't invest in a syndication unless you can invest for the long pull. Shares can't be sold as quickly as shares of listed stock. The high return and tax advantages of real-estate syndication must be balanced against the lack of fast marketability.

don't swallow any promise of a guaranteed return on your in­vestment. If the guarantee is made, find out who is guaranteeing what.

The real-estate syndicate is an important new investment me­dium, a significant contribution to the financing of real-estate ventures. But, to be sure you do get the advantages of a top-notch syndication and don't get caught in an unscrupulous operation, follow faithfully the fundamental rules you have read above.

Should You Speculate in Farm Land?

After twenty years of skyrocketing prices for farm land, the price advance has slowed to a creep. It is now increasingly prob­able that we are moving into a new cycle for farm land prices. In this era, it is likely that price rises will be much more gradual and spotty across the country. It is likely we will witness a return to a semblance of the traditional relationship between the price farm land commands in the market place and the incomes farmers can earn from the land. It is likely that speculation in farm real estate will be no easy get-rich-quick proposition and many fringe gamblers will be frozen in.

Against the price record of the past two decades, the shifts in the past several months are quite impressive. The latest Depart­ment of Agriculture survey shows the average price of farm land in our nation up only 1 per cent over a year ago in contrast to annual increases in the past three years ranging from 5 to 7 per cent. At the same time, buying inquiries for farm land are reported below a year ago, particularly in the Corn Belt and the Lake States.

Also at the same time, the number of farms on the market continues low and farms are changing hands at a rate of only 32 per 1,000, not much above the all-time low transfer rate in 1939. "Under present market conditions," says the Federal Reserve Bank of Cleveland, "a small increase in offerings (or bids) could conceivably have a significant influence on market values."

To understand the probable outlook, it is necessary to under­stand the background. Farm land prices have been soaring to new peaks at such a phenomenal pace that average prices are now 253 per cent above twenty years ago, 68 per cent above ten years ago.

Why the upswing? In the 1940s, the climb was primarily a catch-up from the depressed conditions of the 1930s, a reflection of our farmers' spectacular prosperity. Actually, the price rises were restricted by farmers* memories of their woeful experiences after World War I, the shortage of farm labor and machinery. In the 1950s, a whole new set of forces emerged and while farm incomes went down, farm real-estate prices kept surging up. Buying came from farmers enlarging their existing farms. It came from home builders and industrial corporations. It came from investors eager to buy farm lands as a hedge against inflation.

Now in the 1960s, new forces are emerging again to moderate the price upswing. One restraint is the low return on farm land at today's prices. In the words of the Cleveland Federal Reserve, "the persistent advance in prices of farm land without apparent support from gains in farm income has created a relationship between values and income that is without precedent in the past twenty years." Another restraint is the climbing cost of mortgage rates. The rate of return on farms is about one-half the prevailing interest rate on new mortgages—which surely could discourage some buyers. A third restraint is the relentless rise in farm real-estate taxes and there are no signs this trend is over. A fourth restraint is the dwindling fear of major inflation in the United States.

A slowing price rise doesn't mean the start of a downturn, of course. Supporting farm real-estate prices will be the swelling of our population and the continued building up of rural areas, and there's reason to believe the drop in farm incomes is finally end­ing. But in farm land prices, as well as in so many other areas, the close of the extravagant postwar cycle is apparent.

Should You Buy Gold?

If you had been one of the "smart money boys" who had top-notch connections in the international money centers of the world, you might have bought a bar or two of gold in the London gold market when it reopened in 1954. Some Americans with reputations for being exceedingly shrewd did. When, for the first time since Hitler marched into Poland and set off World War II, London reopened its gold market, there were authorita­tive reports of buying by Americans. As I reported at the time, transactions in the first few days ran into tens of millions of dollars.

Your purchase would have been informally disapproved by your own government. It would not have been illegal, but since ownership of gold by United States citizens in the United States has been outlawed for almost a quarter century, your move hardly would have caused joy in Washington circles. Your act quite possibly would have been condemned by some warm-blooded Americans as a "flight from the dollar."

"Flight" might not have been your conscious aim, but since our law forbids a citizen to buy and hold gold in this country, you would have had to instruct your British agent to store your gold bars under a specified name in a specified safe-deposit box in London or some other spot outside our borders. And some critics might have said, "That's the first step; first you send your money abroad, then you follow in person."

Your operation, though, would have been a sign that you were not only in the know but also well heeled. The smallest "unit" of gold you could have bought would have cost you about $14,000.

Well. . . . If you had done this, you today would be kicking yourself for being a not-so-smart money boy—at least to date. For the price of gold in the London market is still quoted around $35.00 an ounce, the price at which the United States Treasury stands to buy the metal.

So if you had bought and just held your gold bars—which most

It's still an excellent bet that in our century of inflation, gold will maintain its long-term uptrend and rise again. Through the centuries, the metal has become increasingly more valuable. But waiting for the obscure payoff date may be, as some smart Amer­icans have found out, not so smart.

The date of the above report was December 1955. On a Thurs­day in late October 1960, the price of gold in the London market suddenly exploded out of its rut and surged $5.00 above our buying price of $35.00 an ounce. The rise reflected specula­tion that the United States was about to boost the gold price and, by so doing, automatically devalue the dollar. It indicated a decision among an increasing number of cold-blooded financiers that it was safer to hold gold than U. S. dollars. It underlined the grim fact that many in the world markets were downgrading the reputation and future of our mighty currency.

The gambling continued throughout the remaining weeks of 1960. In mid-January, just before he left the White House, President Eisenhower prohibited the holding of gold overseas by American citizens and corporations and ordered the sale by June 1, 1961 of all gold already owned. The ban was designed to help curb the drain on our gold reserves which became head­line news around the globe last year.

In February, gambling against the dollar dwindled perceptibly and the price of gold in London sank back to the $35.00-an-ounce range.

As I wrote years ago, "It's still an excellent bet that in our century of inflation, gold will maintain its long-term uptrend and rise again/' but waiting for the obscure payoff date cer­tainly hasn't been "smart"! And now if you, as an American citizen, "wait," you're violating a Presidential order which could bring severe fines and imprisonment.