Fundamentally, all market activity is a response to the inter­action of personal opinion. Somebody wants to buy, some­body wants to sell, and thereby a market is made. Either way, the impulse represents a human judgment of how business is going, how the market is reacting to the business trend, and how, under these circumstances, this stock or that one will fare. The fascinating thing is that regardless of the situation, two essentially contradictory points of view—to buy and to sell—can always be reached. The same influence may not govern each case; the man who buys Alcoa may have become convinced that aluminum has a bright future, while the man who sells may simply be taking a profit on his holding; but the fact remains that differences can be reconciled in a trade.

The motivations of buyers and sellers are not well enough understood for any very precise theory to be constructed around them, but it seems reasonable to launch this chapter, and the two which follow—all of them concerned with the hard information that presumably influences investors—with some recognition of the emotionalism that is also involved. Much of it is highly sophisticated these days; it has been a long time since the blind panic of the dreadful days that heralded the Crash and the depression; but it is emotion nevertheless. As recently as September, 1955, when the market plummeted nearly 32 points for a loss of $14 billion in values on the news of President Eisenhower's heart attack, we had dramatic evidence that the market does not have ab­solute control of its nerves. And, by contrast, in December, 1957, the market recovered in a few hours the losses oc­casioned by momentary alarm over the President's cerebral occlusion. There are, of course, many practical—and credible —explanations for both responses: the first occurred as an election year approached, Ike's symbolic importance was still immense, the business philosophy he represented was in jeop­ardy, the second occurred at a point when the fact of an ill president had already been discounted, Ike's political sig­nificance, as a president who could not succeed himself, was on the wane. Etc.

Undeniably, however, all of these arguments were based on guesses as to the shape of the future, given one set of cir­cumstances or another. And it is the unknowability of the future which inevitably injects emotion into stock market trans­actions. Pondering the past and scrutinizing the present, in­vestors—professional and nonprofessional alike—seek signs and portents which will predict the impact of tomorrow on their fortunes.

Since the future is largely a blank map, investors must do the best they can with whatever current information they can acquire to carry them to the frontier of tomorrow. Much of it—make no mistake—is extremely useful. But it must also be said that in the absence of sure-fire criteria, the investment world examines every scrap of possibly relevant information for clues.

The result is that the new investor, eager to acquaint him­self with business and financial news, soon finds that his prob­lem is not obtaining information, but digging himself out from under—and discovering how to evaluate—the flood of facts and statistics that inundates him.

Do not be dismayed. In the first instance, you are reading for general information, to familiarize yourself with the field.

You will wish to know the health of the economy, the specific condition of various industries, and the activities of individual companies. And you will be attempting to relate this news to the fluctuations of the market and the perform­ance of particular stocks. It may seem to be a great deal to absorb, but much of it will be information you normally pick up, anyway. Only now you will be applying it for its special relevance to your new interest in investment.

Political and social developments, you will find, can have an immediate or eventual effect on stock prices as readily as economic factors. When the Suez Canal was closed, stocks of companies obtaining appreciable amounts of oil from the Middle East reacted adversely, while domestic oils advanced, anticipating a greater demand on their production. Washing­ton, in all its ramifications, can alter the course of the market. The President, the Congress, the Supreme Court, and all the attendant Government agencies, bureaus, and committees can take action influencing the prospects for companies or indus­tries. Projections of the President's Council of Economic Ad­visors are important. Congressional action on the corporate tax structure, on the extent and direction of military spending, or on labor legislation can have far-reaching effect on business. So can a Supreme Court ruling or an opinion of the Justice Department. The Bureau of Internal Revenue's corporate or personal tax rulings, the Commodity Credit Corporation's policies on commodity prices and lending, the Commerce Department's business forecasts, the Farm Credit Administra­tion's schedule of prices for agricultural products, the Inter­state Commerce Commission's rulings on railroad freight rates—the list of actions and possible reactions is virtually endless.

The power of state utility commissions to regulate rates, the wages-and-hours demands of labor unions, and such revolu­tionary admistrative decisions as that of New York state, some years back, for the first time permitting certain trusts to invest funds in common stocks have direct impact on the financial and investment world.

Read widely and read regularly. Among other things, most financial information is carried in the form of charts, indexes, and averages that won't make much sense until you have enough background to compare them with last month, the previous quarter, or a year ago.

Don't expect to have hot tips or inside information re­vealed to you. Most of the available market material is in the public domain, and the professionals have seen and di­gested it before you. In any event, you are not yet ready to outwit the experts. You are interested in getting into the habit of informing yourself and of staying alert to changes and trends. It will take a powerful lot of reading to decide whether Gulf is a better oil company than Standard of California, or whether General Mills grind finer than Pillsbury. But if you want to know what new products or what new ventures a cor­poration is undertaking, or how one segment of industry is going compared with another, or what some analyst thinks of a certain stock, your reading will tell you.

In time, you will become selective. You will want to stay abreast of general business and market news, but, unless you are dealing in commodities, you will not pay much attention to the grain markets or coffee, sugar and onion futures. And you will probably not memorize freight-car loadings except insofar as you want an indication of how the railroads are getting along.

Keep two points in mind: First, no one can predict the future with any high degree of accuracy, and the farther ahead the seer attempts to look, the less accurate he is likely to be. Be receptive; good information is where you find it. But be skeptical of predictions.

Second, you will find that the costliness of information does not necessarily reflect its value. Much of the best ma­terial you will get is free.
Your primary sources of investment information are two: New York Stock Exchange member firms and the com­panies in which you are interested.

Your brokerage firm will provide accurate, up-to-date material, free for the asking. The increase in the number of new investors has launched many firms on broad-scale in­formational programs. Most of them have weekly market letters, monthly or quarterly surveys, analyses of individual stocks or industries. (A recent tabulation shows that some 296 member firms now issue about 30,700 market letters, 15,500 pieces of sales literature, and 1,800 special reports— a stack of paper some 38 feet high and weighing around 975 pounds!) The weekly letter is usually the work of a senior analyst whose job is to move around and tap pro­fessional opinion on current market trends, or to conduct field investigations of new developments in companies or industries. It is conversational, newsy, and necessarily not very exhaustive. The monthly and quarterly surveys are more thoroughgoing, but the editorial and production time involved in putting them together makes them something less than up-to-the-minute. These usually compare per­formances, indicate trends, and carry ratings or opinions of various groups of stocks. You can get on the mailing list for these items very easily.

On request, your broker will also send you fact sheets on individual companies you may be interested in. These usually cover the basic elements of the company's financial history: its capitalization, its earnings and dividend records, and the prices at which its stock has sold.

On request, too, you may get rather more elaborate studies of companies or industries, the range depending mostly on the versatility of your brokerage firm's research department.

Finally, your broker should have booklets on specialized ventures, such as the Monthly Investment Plan, investment clubs, or commodity trading.

Corporations are also very much aware of investor in­terest these days, and most of them are happy to send you annual reports, quarterly statements, stocks prospectuses, or other information, if requested. These are frequently more ample than your broker can provide; annual reports contain balance sheets, consolidated income statements, and earnings records going back 10 or even 20 years, as well as general factual information on the company's activities.

It must be remembered that companies are naturally preju­diced in favor of their own business interests, and are inclined to put their best foot forward. This does not mean that their information cannot be trusted, but simply that an annual report, for instance, which is management's accounting of its stewardship to stockholders, will put the company in the best light. It is possible that there will be an overenthusiastic view of its performance or prospects.

Secondary sources coming easily to hand, are ordinary newspapers—some 600 of which now print daily stock tables —and general-circulation magazines dealing with business and finance. These have the virtue of non-involvement with the financial community as such, and possibly a broader perspective on the news. On the other hand, they may lack some of the information readily found in more specialized financial publications.

These are plentiful and fascinating. The Wall Street Jour­nal and the Journal of Commerce are the principal news­papers; very little escapes them. Among the magazines are Forbes, Barron's, Financial World, and The Magazine of Wall Street. Basically, each provides much the same kind of information: analyses of the market, of stocks, and of industry groupings. One of the best, and by far the cheapest, of such magazines is The Exchange, a monthly publication of the New York Stock Exchange. As befits the Exchange, it is neutral, and will make no recommendations. But it is a gold mine of statistical tables on stock performances in every conceivable combination.

As you cast farther afield, you will find that banks, indus­trial trade associations, and various departments of the U. S. Government issue an enormous variety of periodicals commenting or reporting on business conditions and trends. Write for them.

Finally, there is advice-at-a-price. Today there exist pro­fessional investment services to fit every need and every pocketbook. Some place heavy emphasis on factual analysis of business trends and their effect on the market. Some are immersed in the mystique of the market and believe that its tidal action has a life of its own that can be predicted by elaborate charting of its movements. All freely advise buying, selling, or holding specific stocks on the strength of their conclusions. Mostly they use the newsletter technique, and will airmail or telegraph extra-hot information for an addi­tional fee.

How good their advice may be is something each investor must decide for himself. Unless he has a fair-sized portfolio, he will find that paying for some services will take a healthy bite out of the modest dividends he can expect from following his adviser's recommendations. It is also fair to say that no service has been so outstanding as to run the others out of business.

A last point: Your biggest help in cutting the mass of material that comes your way down to a useful minimum is to see which seems most accurate and reliable over a period of time. Remember, not all information is published with your best interests in mind. Advice is frequently condensed to a point of oversimplification. Sales motivations tend to whip up enthusiasm for a stock or its issuing company. The attraction of the products of a brave new world—titanium, columbium, atomic fuels, extracts from sea water—must be tempered by awareness of the tremendous developmental costs and the investment of time that must precede the reali­zation of profit.

The market and its potentials are tremendously exciting.

Don't be swept away. Try to gauge all information you re­ceive. Apply these tests.

Does it seem to be based on known facts?

Are conclusions drawn after careful study, but frankly labeled as deductions?

Is it out-and-out speculation? —and then act accordingly.