ck
Exchange in order to trade in it.

This story may or may not be true, but we believe the statement that
people trade in stocks they do not know anything about is true. You
should be careful not to buy a stock merely because somebody says it is
a good thing to buy, unless the person making the statement is in the
business of giving information on stocks, because it may be only a rumor
with no substantial basis. Of course, if many people act on the rumor,
there will be active trading in the stock, and it is frequently for that
purpose that such rumors are started.

_PART TWO_

WHAT and WHEN TO BUY and SELL

CHAPTER V.

WHAT STOCKS TO BUY

In deciding what stocks to buy, it is well to consider first the classes
of stocks, and then what particular stocks you should buy in the classes
you select. We would first of all divide all stocks into two classes,
those listed on the New York Stock Exchange and those not listed on the
New York Stock Exchange. As a rule, it is better to buy stocks listed on
the New York Stock Exchange, although there are frequent exceptions to
this rule.

Then, the stocks listed on the New York Stock Exchange may be divided
into classes, such as railroad stocks, public utility stocks, motor
stocks, tire stocks, oil stocks, copper stocks, gold stocks, and so
forth. At certain times certain stocks are in a much more favorable
condition than at other times. In 1919, when the industrial stocks were
selling at a very high price, the public utility stocks and gold stocks
were selling low, because it was impossible to increase incomes in
proportion to the increase in operating costs. But since the beginning
of 1921, the condition of these two classes of stocks has been improving
and the market has reflected that improvement.

At the time of this writing (early in April, 1922) we are recommending
the stocks of only a very few manufacturing companies; but we are
recommending a number (not all) of the railroad and public utility
stocks, and a few specially selected stocks among the other classes.

In every instance, when you make a selection, you should consider the
company's assets, present earnings, and prospective future earnings, and
then take into consideration all the influences that affect price
movements, as explained in subsequent chapters.

CHAPTER VI.

WHAT STOCKS NOT TO BUY

A great deal more can be said about stocks you should not buy than about
stocks you sh