With the possible exception of the classified ads, no section of your daily newspaper contains more information per inch than the financial pages. At first look, they may seem cryptic and unintelligible, and it is certainly true that finance, like any other specialty, has its own language, understood clearly only by those who speak it regularly. But the difficulties are easily overcome, and most investors soon find the pages an indis­pensable record-keeper, guide, and resource in the making of investment decisions.

They report, first of all, such financial events as mergers, bond and stock notations, corporate earnings statements, management shifts—news of importance to the investor, although rather too specialized to be found on Page One.

Of most immediate interest, however, are the market re­ports, the listing of sales on the New York Stock Exchange. These, in highly condensed form, reveal the pulse of stock-trading activity. At the head of the list are always carried the total volume of shares traded during the day for all stocks, totals for the previous day, and totals for the same day a year ago. The accumulated volume for the year to date is shown and compared with the similar period of a year and two years ago.

The list itself looks like this:

1959 High	‘60 Low	Stock and div in $	Sales 100s	In open	High	Low	Close	Net chg
8	5½	Gen Am Ind 0.20g	1	5⅝	5⅝	5⅝	5⅝	+⅛
36⅝	27⅜	Gen Am Inv 2.45g	7	28	28	27⅝	27¾	….
39	22	Gen Am Oil 0.40b	26	22⅝	23½	22⅝	23⅛	+⅜
67½	51¼	Gen Am Tra 2.10	25	60	61	60	61	+1
14¼	11	Gen Bak 0.60	10	11½	11½	11⅜	11½	….
53	138	Gen Bak pf 8	Z20	142	142	142	142	-½
10⅜	7⅝	Gen Banc 0.40	3	8⅞	8⅞	8¾	8¾	-⅛
24½	29⅝	Gen Bronze 1.50	2	31⅞	31⅞	31½	31½	-¾

1959 High	‘60 Low	Stock and div in $	Sales 100s	In open	High	Low	Close	Net chg
45⅞	37½	Gen Cable 2	4	41½	42	41½	42	…
84	74	Gen Cbl pf4	Z20	78½	78½	78½	78½	-½
33⅜	22¼	Gen Cig 0.80	15	22⅞	23½	22⅞	23½	+⅜
9⅜	7½	Gen Cont Fin 0.40	10	7¾	7⅞	7¾	7⅞	+⅛
39¼	24	Gen Controls 0.60	29	25⅜	25¾	25	25⅛	…
66½	42⅞	Gen Dynam 2.	73	48¼	48¼	47⅜	47⅜	+⅜
99⅞	74	Gen Elec 2	164	88½	88⅞	88	88¾	+1⅛
40	30¾	Gen Finan 1.20	3	33	33	32½	32½	+⅛
07¾	74¼	Gen Fds 2.60	30	101½	103¼	101½	102¾	+1¾
38⅜	16½	Gen Indtru 0.15g	61	25¾	26⅞	25¾	26¼	+1¼
37⅝	26¾	Gen Mills 1.20	21	27⅝	29	27⅝	29	+1½
14	101¼	Gen Mills pf5	Z30	103¾	103¾	103¾	103¾	-¾
58⅞	45	Gen Motors 2	429	46¼	47¾	46¼	47¾	+1⅞
12½	100⅜	Gen Mot pf 5	1	104½	104½	104½	104½	…
87	75¼	Gen Mot pf 3.75	2	81½	81½	81¼	81¼	…
26	23½	Gen Out Ad 1.30	9	23¾	23⅞	23½	23½	-¼
43⅞	32⅜	Gen P Cem 1.20a	14	33	33½	33	33½	+½
50	31½	Gen Prec 0.25e	28	48	48¾	47¾	47¾	+¾
73	52¼	Gen prec 3pf3	3	63	63	62⅞	62⅞	+⅝
76	53½	Gen Prec pf2.98	1	67	67	67	67	+1
5⅞	5⅛	Gen Pub Sv 0.36e	34	5¼	5¼	5⅛	5⅛	…
26¼	22¾	Gen Pub U 1.12	76	23⅜	23⅝	23¼	23⅝	+⅛

Reading from the left, you are told first each stock’s high and low for the year, the range of prices within which it has fluctuated. Prices are recorded in “points” ($1 per point) and eights ($.12 ½ per eight). General American Industries, a manufacturer of leather goods, has moved, as can be seen, between $5.50 and $8 in 1959 and the early weeks of 1960, a very narrow range. These figures help relate current price to past activity.

Following the name of each stock is an indicated dividend, again in dollars and cents. A letter following the dividend figure refers to footnotes at the end of the list (or bottom of the page) which offer further information. General Portland Cement, for instance, paid $1.20 per share plus one or more extra dividends (a). General American Oil paid a stock dividend (b) in addition to its regular $.40 a share. General Public Service has "declared or paid so far this year" $.36 (e). General American Industries, General American Inves­tors, and General Instrument, all indicate dividends (g) "paid last year"—which simply means that it is too early to know what this year's payment is likely to be. If and when they announce quarterly dividends, the new payment will be inserted and the (g) will be changed to (e). Dividend notations, of course, make it possible to calculate quickly the stock's yield. General Dynamics' selling price of 47¾ divided into its dividend of $2 means a return of 4.2 per cent.

If the name of a stock is followed by the symbol "xd"— none of the issues listed in this section are—it is selling "ex-dividend," which means that the price is automatically lower by the amount of an anticipated dividend. When cor­porations announce dividends, they say that stockholders of record as of a certain date will receive payment at a later, specified date, the time lapse permitting the writing and distribution of checks. Even though a stockholder subse­quently sells his shares, he is on record to receive the dividend, and the buyer is not. The dividend amount, therefore, is subtracted from the purchase price. A stock which closes one day at 41, and goes ex-dividend the following morning in respect to an upcoming $1 quarterly payment, will open —in the absence of other market activity—at 40.

The ex-dividend date is three full business days (Saturdays and Sundays excluded) prior to the corporation's date of record. This is because stock transfers require three days; to become a stockholder of record in time to participate in the dividend, you would have to buy your shares three days before the corporation closed its books and settled down to writing its checks. (Do not confuse the three days required to transfer the names of new stockholders on company books and the four business days brokers are allowed to transfer and deliver to you the certificate of any stock you have purchased.)

There   are   perhaps   a   dozen   other   designations, either qualifying the terms of dividend payments or specifying the status of the stock issue.

The letter (k), like (e), means "declared or paid this year" but designates a cumulative preferred with dividends in arrears. Trouble also is indicated by (p), which means "paid this year," but warns that dividends were deferred or omitted at the last dividend meeting. A callable preferred issue that the parent corporation has decided to redeem and retire is noted as (old). A new issue, common or preferred, that has been announced but has not yet made its appearance is listed as "when-issued" (wi).

Next comes the day's sales volume in hundred-share units. The range, as can be seen, runs from 42,900 shares of Gen­eral Motors common, always an active stock, to 100 shares of General American Industries and a couple of preferred issues which are generally less active than the more numerous common stocks.

Three preferred issues, it will be noted, have the sales figures prefaced by the letter "z." This indicates that as relatively less active issues these may be traded in 10-share lots or "sales in full."

The succeeding four columns trace the course of the day's business: the price of the first round-lot sale after the market opened at 10 a.m., the high and low points reached during the next five-and-one-half hours, and the last price achieved at the 3.30 p.m. closing. The final column, "net change," shows the difference between the day's closing and the previous day's closing. General Motors, for instance, opened at 46¼ and closed at 47¾, up 1½points. The net change, however, is plus 1⅞. This means that the stock closed the previous day at 45⅞—and that it was up three eighths on the first sale of the day reported in the list.

What does the investor learn from all of this? Well, he can see that General Motors is selling at close to its year's low, General Foods quite close to its high, and General Electric at about the midpoint of its 25-point spread of the past year. Judging by this section of the list, the day ended on the up­side, though not significantly, only by fractions. The fluctu­ations between opening and closing were narrow. It is quite possible, however, for stocks to gain or lose as many as 5 points, an impressive amount, in the course of trading, but to even out by day's end and reflect only a fractional net change.

The total volume of 3,800,000 shares was moderate; the daily average volume throughout 1958 was 2,964,517 shares, General Motors, as a little list of the day's leaders will show, was the sixth most heavily traded stock (A "when-issued" Studebaker-Packard stock, on a turnover of 147,900 shares, was that day's most active issue).

In isolation, the day cannot be said to be anything but routine for the stocks shown in this section. The investor, however, collects the days and seeks a pattern. If this were the twentieth day that stocks had held to these levels after a steady and heartening rise—and if there were nothing in the political or business news indicating that new contracts for missiles or military aircraft were being let—the investor who'd bought General Dynamics at 32 might figure the market had reached a temporary peak and, with his stock near its high, decide to sell and take his 15-point profit.

On the other hand, with General Motors hovering near its low—and in the absence of news that corporate taxes were going up or that auto men expected a poor year—an investor might decide that the stock was lagging a bit behind the market, while returning a fair 4.1 per cent, and buy.

By the same token, if this day were the twentieth at these levels after a drop, the General Dynamics man could still decide to take his 15 points and run ("since the market hasn't rallied after three weeks, it might go still lower and cut my profit"). Or, he might figure that the drop had done him no damage—that his stock was still within reach of its high—and sit tight, waiting for an upswing and perhaps an increase in his gain. The General Motors man, on the other hand, might figure that a little more downward pressure, say, four more points, would give him a premier stock with a 4.5 per cent yield. He could enter a limit order with his broker to buy GM at 43¾.

The possibilities are endless. Enough like-minded GM buyers might, indeed, pull the price down a bit, but if they simply bought "at the market"—at the best prevailing price —they might instead create a flurry of interest. GM owners could then hold back and wait for the rise that the pressure of buy orders would encourage. All of this would be reflected in the daily stock list, and be interpreted and acted upon by other stockholders, according to their lights.

Accompanying the stock lists are tables of averages. These give the investor, over a period of time in which comparisons can be established, a shorthand indication of market trends.

Coverage varies from paper to paper. But the New York Herald Tribune, one of the more comprehensive papers, com­piles and prints a wide selection of indexes, generally com­posites of the performance of representative groupings of stocks: 10 oils, eight utilities, seven coppers, or, simply, 70 industrials, or 100 stocks. Railroad averages are always kept separately in categories of Grade A and Grade B roads and an aggregate.

Time was, before the turn of the century, when the rail­roads were the most powerful corporations in the country and the most dominant stocks in the market. The earliest Dow-Jones average, issued in the 1880's, was composed of 11 stocks, nine of them railroads. By contrast, the emerging oil, tobacco, and manufacturing industries were volatile, specula­tive stock ventures, and were therefore kept separate from the stable railroads. Today, of course, railroads, while still an important segment of the market, are not the powers they once were. They have lost, and continue to lose, ground to air freight, truckers, and pipelines. Those compelled to main­tain unprofitable passenger services sustain annual losses that cut heavily into the profit on freight hauling. Rate schedules are in contention. Earnings records are spotty. Meanwhile, the once-risky industrials have become the bedrock of the market. Still, the rail averages survive and are a traditional, if no longer too significant, indicator of market trends.

The most notable averages are probably the Dow-Jones, the Standard & Poor's Stock Index, the Securities and Ex­change Commission averages, and the New York Times and Herald Tribune averages. Standard & Poor's also has a 500-stock average that is computed electronically every hour of the trading day. Each average is computed in a slightly different fashion, in an effort to overcome the flaws and imbalances that inevitably crop up when a market segment is used to reflect the whole.

The Dow-Jones average of 30 industrial stocks, for years a byword and a talisman, is reached by adding together the closing prices of the stocks involved and dividing by 3.964. This is an artificial divisor which frequently must be changed to compensate for splits and stock dividends, so that the stock whose price is thereby altered will not be outweighed by other items on the list and the continuity of the average will be maintained. (Since actual prices are involved, the stock whose price is halved by a 2-to-l split would lower the average unless adjustment were made.) The stocks making up the list are also changed occasionally to achieve a grouping more representative of the market trend. Loew's, Inc., for instance, was recently supplanted by International Paper.

As critics are quick to point out, however, a large gain or loss by several stocks making up the average can over­balance an accumulation of small losses or gains by the others and give a false picture of the trend for the day.

The Standard & Poor's index of 500 stocks takes the period 1935-1939 as a base (100) and relates subsequent movements to that. Its method of computation is different from that of the Dow-Jones, and adjusts for stock splits somewhat more precisely.

Analysis of the four averages, however, seems to indicate that each has its strengths and weaknesses, depending on what aspects of market performance is of major concern.

It must be remembered, too, that the little charts and graphs running in conjunction with the daily stock list and purporting to show the market trend usually illustrate only the activity of Dow-Jones or one of the other samplings. No one, it seems, adds up all the prices of all the stocks each day to show the movement of the entire market. And, even if someone did, this average, too, would be suspect. For it can be argued that if the vital action of the big market leaders distorts the more modest movements of the bulk of the list, so would the small changes in small-turnover stocks act as a brake on the direction of the market indicated by the top performers. American Snuff can hardly be said to have the same impact in the market as Bethlehem Steel.

(The New York Stock Exchange has devised a technique for judging market movements as a whole, the "Stock Price Profile," which charts each month the percentage change in stock prices. In the month ending December 15, 1959, for in­stance, 588 common stocks rose, 440 fell, and 56 were un­changed. Of those that rose, 112 increased less than 2 per cent, 110 increased 2 to 4 per cent, and so on to the top group of 141 stocks which increased in price by 10 per cent or more. Conversely, the bottom group was composed of 32 stocks whose prices fell 10 per cent or more. Because it deals in percentages, the profile cannot show what price level is concerned, or whether the stocks rising 10 per cent went from 20 to 22, or whether those dropping 10 per cent went from   150  to   135.  Nonetheless, it gives more  information about the distribution of price fluctuations than do the averages.)

Averages can provide a vantage point from which to view the market, but they must be used in full knowledge that they are symbols and can only have a relative value, and then only for the person who understands how they are con­structed and what built-in limitations they possess.

Accompanying the daily stock list in any paper offering complete financial coverage is a column of bid and asked prices. This lists the stocks in which no transactions could be completed because what the seller wanted and what the buyer would pay could not be reconciled. The items found here are usually preferred stocks, "guaranteed" stocks (small railroads whose facilities are leased by larger lines at rentals guaranteeing a fixed dividend), and other less actively traded issues. On this day, for example, the highest price bid for Liggett & Myers preferred was 145¼, and the cheap­est price at which anyone would sell was 147. The Pittsburgh, Ft. Wayne & Chicago Railway, a line leased by the Pennsyl­vania, had an even wider spread: 135-146. First National Stores couldn't bridge the difference of even half a point: 56 was bid, 56½ asked.

Should a sale be transacted on another day, it would, of course, be recorded in the main list. Or, should there be no action in a stock listed as active today, it would be transferred to the bid-asked list.

In addition to New York Stock Exchange dealings in common and preferred stocks, many newspapers also report the activities of several other markets. The American Stock Exchange, which handles some 900 stocks not found on the NYSE, is the nation's second-largest market, and its sales are listed in full, in the same manner as those on the Big Board. A separate listing is made for New York Stock Exchange transactions in bonds. And a column or so of bid and asked prices on out-of-town exchanges—Midwest, San Francisco, Toronto—may also be carried.

Finally, a sampling of bid-and-asked prices for representa­tive over-the-counter securities will be given. These will be categorized; most bank and insurance stocks and all open-end mutual funds are sold over-the-counter, as well as a vast and varied group of industrials, and some bonds, usually state, public authority, or foreign obligations. Mutual funds are generally priced according to the value of their assets, which means the total worth of their holdings, as indicated by each day's closing prices, divided by the number of fund shares outstanding. The value-per-share is carried in the bid column; the asked column adds on the 7, 8, or 9 per cent loading charge or sales commission that the new customer must pay the fund in order to acquire shares.

Associated with market activities will be some additional statistics indicating forces at work, upward or downward. Tabulations of brokers' loans from banks indicate several things. Brokers borrow to help finance the underwriting of new securities. Specialists and odd-lot dealers borrow to finance inventories of stock in which they are long. Borrowing may help pay for a brokerage firm's own investments, or serve as credit for customers buying on margin.

The tabulation of "short interest," which appears about the middle of each month, indicates what stocks investors have sold short in anticipation of a drop in price. The list, compiled from member firms' books, shows each stock in which there is a short position of more than 5,000 shares, and each one in which the position has changed- by 2,000 or more shares since the previous month. The amount is usually considered a cushion under the market, for despite the bearish impulse of the short seller, he will eventually have to cover, and his obligations represent a backlog of buy orders.

The record of odd-lot sales suggests the degree of small-investor activity, as opposed to that of the large institutions which may be buying or selling 5,000 shares at a crack. Member trading indicates how much brokers may be acting for their own accounts (brokers like to make an extra dollar now and then, and may be fascinated enough by their own advice to buy or sell.)

Beyond all this are the so-called "business barometers." These report on the prices of basic commodities—wheat, corn, cotton, potatoes, onions, coffee, sugar, etc.—usually in terms of "futures." A future is simply a contract to buy a certain quantity (and quality) of a commodity at a later date at a price established now. Although commodity deal­ings are complicated and risky, they also have the beneficial effect of spreading supply and demand over a period of time.

A textile producer, a cereal-grain miller, or a dealer in coffee, sugar, or potatoes, for instance, may want a certain quantity of his staple commodity in July. This, however, is at the beginning of the new harvest, and the price of available stocks of the item is high. The would-be buyer could have done better on price if he had bought in September at the open-market cash price and held until July, but this would probably have involved insurance, warehouse fees, and so forth. Instead, through a commodity broker, he buys a future in his commodity, specifying a July delivery at a per-pound (or per-bushel) price. Meanwhile, growers or pro­ducers of the commodity are selling futures through other brokers which obligate them to deliver in July a certain quantity of their crop at a certain price. Reconciliation of the outstanding contracts to buy or sell various quantities at varying prices is the work of the commodities market.

A poorer crop than anticipated, which decreases the supply of the commodity, may send the price shooting up in the intervening months, but whoever holds the miller's or dealer's contract to buy must make good on delivery. And whoever buys the grower's contract to sell can hold him to it. On the other hand, if the price should sag, the miller must still pay the price agreed upon in his future, and someone who can buy the commodity for less in the open market will fulfill the contract at a profit.

Commodity trading becomes even more intensified when futures to buy or sell are hedged by contrary contracts, written in succeeding weeks and months, to compensate for price fluctuations. It is a fast-moving and potentially nerve-racking business, of most concern to companies which are themselves dealers in the commodities traded, and to a few knowing speculators who have chosen to make commodities their specialty.

Other barometers are indexes of wholesale prices, the volume of retail sales, freight-car loadings, bank deposits, building contracts, steel production, industrial employment and payrolls, electric-power output, import and export totals, and various rates on money and credit. Each of these, by itself, is fairly meaningless to anyone but an expert in the field. Altogether, however, they contribute to an image of the economy and the momentum behind it. If it is vigorous, if people have money in their pockets (wages) and something in reserve (savings), if the department stores are selling and new housing starts are up, if credit is available, business sees the outlines of a prosperous year ahead.

By the same token, if several of such items indicate distress, you can look for their effects to be felt elsewhere before long. Generally speaking, if inventories are high and freight-car loadings are down, it is reasonable to assume that goods are not reaching the market, and that stagnation may be setting in.

This fast-running stream of facts and information bears on the market in two ways. The data by which the nation's general economic and financial climate can be interpreted are said to be "fundamental" factors in the market's condition. At the same time, it is well known by anyone who has watched the market consistently that there are days, or weeks, when specific stocks, or groups of stocks, or the market as a whole, do not accurately reflect conditions as they seem to be. The market may be unduly optimistic, spurting ahead farther and faster then the economy gives it reason to. Or it may lag be­hind. Or it may run exactly counter to conditions, sagging in the face of prosperity and advancing in the face of gloom. At work here—aside from human cussedness, for which there is as yet no accurate measurement—are what are called the "technical" factors. In sum, they determine the "technical position" of the market.

A most common technical factor is the amount of short interest which, as has been noted before, represents a back­log of eventual buy orders as the shorts bid to acquire stock to pay back what they have borrowed. The impetus of their purchases, if the volume is sufficient, may well touch off a rally. This is said to put the market in a strong technical position.

The market may become "overbought" or "oversold." An overbought condition may result if stocks have been vigor­ously accumulated, and have advanced briskly to levels which peg the price "too high." This, of course, is a relative judg­ment, but one which may be arrived at by a number of professionals whose response is to sell short, anticipating a drop. To the extent that the advance has involved margin buying, a drop may force the optimists to meet margin calls or sell out, taking their profit, if any, at lower levels. An overbought market is technically weak. An oversold market, which is just the reverse, catches the shorts on an upswing, and is technically strong because they are forced to assist the advance by buying.

If stop orders are numerous when a large supply of stock comes on the market to be sold, a decline will catch the stops, which automatically become orders to sell, and thus accentuate the downhill slide. This is another technically weak condition.

Technical factors are subtle. Mostly they are of concern to the short-term operator who is on top of the market day by day and hour by hour. Frequently a technical condition has asserted and corrected itself before the average investor is aware that a shift has occurred. Frequently, even for the experts, technical adjustments are more easily defined after the fact than while they are happening. They are a favorite recourse of the market analyst seeking to explain a sudden rise or fall, in the absence of any marked change in the fundamentals.

This is not to suggest that technical factors are not mean­ingful; it is to say that they are hard to pin-point. Since pools and manipulation have been banned, it is not possible to say that "the insiders" are acting in concert to drive this stock up and that one down. We are left, then, to conjure with the coincidence of a great many impulses to sell or to buy, stirring in enough stockholders across the country to affect the market's course. This can happen. Market analysts, in­vestment counselors, students and theorists, and assorted experts are constantly seeking an edge, but the fact is that there is a preponderence of agreement among them much of the time. There are only so many stocks. There is only so much information available about them. There are many rules of thumb that everyone knows. And only three responses that anyone can have to them: buy, sell, hold. It is not re­markable that trends develop.

Always, of course, the possible interpretations are numer­ous. The point in considering financial information at all is to try to visualize some of the flesh-and-blood conditions that they attempt to summarize.

Try to amplify the indexes you read with a sense of things as you see them and as you know them to be. No individual's experience is broad enough to supersede the summary reports of many regions of the country. Yet unless you can take a perspective on electric-power output (Is it up because we have a cold winter or because the aluminum mills are going full blast?), you can lapse into a dreamworld where statistics become an end in themselves.

This they are not, and this they can never be. Every num­ber on every financial page records some wise, shrewd, panicky, foolish, indifferent, right, wrong, passionate human action somewhere. And on the basis of these numbers, other actions, similarly motivated, will take place somewhere else.

Remember that as your sophistication as an investor grows, you will not always wish to be tagging along after the crowd, doing what it does, and hoping somehow that collective action will insure you against loss. As has been pointed out many times, a truly successful investor senses the opportunities in occasionally running against the popular tide. If he has powers of divination, if he is extraordinarily attuned to the national psyche, he is perhaps beyond emulation. But it would seem reasonable to assume that at some point he is able to lift his sights above the averages, however much he may respect them, and spot the exceptional.

For exceptions do occur. Every stock which does better than the market is, by definition, above-average and excep­tional. In order to discover such exceptions, you may need to know more than even a complete financial section can tell you. But many of the clues are there if you can sift them, weigh them, combine them into new relationships, and make them work for you.