| In spite of the trend toward diversity, most of the | | | | Chip rating. |
| hundreds of stocks in the stock market can be | | | | Food production and packaging is another sound and |
| grouped into one product or service category or | | | | basic industry. Processors of grain-the flour millers, |
| another. | | | | cereal producers, and syrup manufacturers-dairymen, |
| Which group is for you? Well, there are about fifty | | | | and frozen-food packagers are all steady performers |
| clearly defined industries in this country, even more if | | | | and likely to remain so, as the population increases |
| you are particular enough to separate aircraft | | | | and the nation's diet continues to improve. Strangely, |
| manufacturers from airline operators, or natural gas | | | | despite America's passion for beef and pork and |
| from oils, or Class 1 railroads from lesser lines. Even | | | | lamb, the meat packers do not enjoy the same level |
| these groupings are by no means complete. The list | | | | of prosperity. |
| could be fleshed out with banks, insurance | | | | The drug manufacturers generally are a conservative |
| companies, leather-products companies, glass and | | | | group with an impeccable reputation and an enviable |
| container manufacturers, shipbuilders and fleet | | | | profit record. (You will see them classified as |
| operators, textile millers, sugar growers, and radio | | | | producers of "ethical" or "proprietary" drugs. The |
| and television manufacturers and broadcasters. | | | | former are the medicines or medical ingredients that |
| All of this reflects the wonderful and confusing | | | | can be dispensed only by a doctor's prescription. The |
| diversity of American industry. Among it all there | | | | latter are the drugstore items-cough syrups, cold |
| should be a few good stocks to buy. Indeed, there | | | | tablets, vitamins, ointments, and pills-that health |
| are. But it will not take much investigation to learn | | | | conscious America doses itself with to the tune of |
| that each of these industrial groupings has a | | | | more than three billion dollars a year.) Competition |
| reputation, and that even the best reputations may | | | | among the drug companies is fairly fierce. |
| be subject to cyclical slumps. These reputations are | | | | The company that comes up with a new antibiotic or |
| variously described, but roughly they can be said to | | | | tranquilizer enjoys a keen competitive edge. And so |
| follow the gradations given to stocks. There are Blue | | | | does the one whose trade name for a standardized |
| Chip industries, there are "businessmen's risks," there | | | | product becomes more popular than the rest. As |
| are out-and-out speculations. Or, you might say, | | | | suppliers of a basic American necessity, however, the |
| there are industries of investment caliber, those of | | | | drug group ranks with the food and power |
| good quality, those responsive to abrupt up-and | | | | producers. |
| downswings, or, again, those which are speculative. | | | | Chemicals must also be near the top of any quality |
| Some are growth industries, some have hit then: | | | | list. Certainly, few industrial groups have such a high |
| peak and leveled off on a comfortable plateau, some | | | | percentage of truly outstanding companies or such a |
| are on their way down and out. | | | | basic and vital economic function to perform. |
| As always, generalities must be taken with a grain of | | | | Interestingly enough, as this is written, they are just |
| salt. Within a group, one stock or another may run | | | | beginning to come back into favor. Several years ago |
| entirely counter to the general trend, either up or | | | | they were among the bluest of Blues. Then |
| down. (And it is precisely this sort of contrary action | | | | overexpansion, overproduction, and similar corporate |
| that occasionally enables shrewd traders to buck the | | | | imbalances began to plague them, and took the |
| trend and come up with a winner.) | | | | bloom off the rose. |
| Among the industries of solid reputations, you would | | | | Earnings fell off. The performance of chemical stocks |
| have to put the utilities first. This has not always | | | | as a group lagged behind that of other industries. |
| been so. Manipulation with public-utility holding | | | | Now they are picking up again, and brokers' letters |
| companies was one of the skyrocketing scandals of | | | | are rediscovering opportunities in chemicals. Such |
| the days before the Crash. In the 30 years since | | | | short-term reactions are not serious enough to |
| then, however, utilities have regained status among | | | | weaken the fundamental stability of the chemical |
| the solid rocks of the securities markets. They are | | | | group. But one of the points to be made about the |
| rarely spectacular performers. | | | | reputation of any category of stocks is that it is |
| Rate regulation by state power commissions | | | | never invincible. |
| permits-and even maintains-a reasonable return on | | | | Choosing pairs of currencies to trade against each |
| utility operations, but curbs all chance of runaway | | | | other is another interesting study. |
| profits. All estimates of future power needs and | | | | Here are some of the best: The Euro and the Swiss |
| consumption point upward. Many utilities are in the | | | | Franc. The British Pound and the Japanese Yen. |
| forefront of atomic-energy development. | | | | These are best traded with the U.S. dollar. So we |
| Conservative management, steady expansion of | | | | could trade the U.S. dollar against any of the above |
| plant and generating capacity, and temperate market | | | | currencies for a good return on our investment. |
| action maintaining yields at 4 to 5 per cent are | | | | Using good Forex software will also help you |
| factors which currently give the better utilities a Blue | | | | considerably. |