Investor Trading

As previously remarked, severe business setbacks are least felt by public utilities; this means that their quoted prices remain within a narrow range and their current dividend rate usually is maintained. Further expansion with more and more customers means an increase in gross receipts and that in turn promises an increase in dividend payout. The continued growth of the nation, coupled with a series of prosperous years, has meant a steady increase in the quoted prices of utilities securities; indeed, Mr. John Q. Public can find no better medium for a beginning in common stocks. (See Appendix D.)

CONCLUSION
The purchase of a common stock is no simple matter. The selection of an industry and of a stock within that industry requires the serious weighing of many things. Diversification, it is true, is always a watchword, but with this must be coupled an analysis of the over-all status of the business cycle. It is extremely doubtful whether a rush to buy at a time when stock prices have been driven to dizzy heights by over-optimism is at all wise; the purchase made at an all-time high may actually insure a loss at some future time when it may become necessary to sell. Income is not the sole feature of investment; capital gain is also to be borne in mind; the means of obtaining such gains certainly cannot be found in listening to the siren call of high prices. In this connection, the current price-earnings ratio is often an approximate guide.