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