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.