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Of course, in the market, price fluctuation
was inevitable. Common stock could never have the stability
of a Government obligation like the E-bond. Still, it had become
a very respectable piece of merchandise. Workers learned that
their union pension funds included large blocks of sound common
stocks. And frequently the company they worked for offered them
an opportunity to acquire its stock through one sort of monthly
purchase plan or another. Various state commissions took a fresh
look and decided that common stocks were safe enough to be incorporated
in widows' and orphans' trust funds, traditionally the most
conservative type of portfolio.
And, on top of everything else, common stocks in the rising
post war market were paying off well. Interest on savings accounts
was no more than 3--3¼ per cent. Stocks were paying at
least 4, often 5, and in some instances 6 and 7. When they paid
less than that, it was usually because their price had appreciated,
which reduced the yield but pleasantly increased value. Nothing
wrong with that either. There were nuts and raisins in the cake,
as well: splits, stock dividends, extra cash returns.
Furthermore, the market was coming within the reach of the person
of modest means. By monthly payments to a mutual fund one could
acquire a pro rata share of a massive stock portfolio whose
individual items would have been far too expensive to buy. And
in 1954, the New York Stock Exchange pioneered the revolutionary
Monthly Investment Plan (See Chapter 11) which permits purchase
of fractions of shares of stock, regardless of price, on a regular,
cumulative basis. Brokers awakened to the great untapped army
of potential investors, smilingly invited the small account,
and spent thousands of man hours educating anyone who would
listen in the essentials of common-stock investment.
But all of this would have had no effect if people had not begun
to trust the market. This trust was a long time coming. The
exchanges actually had been laboring mightily since the 1929
debacle to put their house in order and to persuade people of
the honesty and sobriety of their operation.
But few listened except the professionals, the sophisticated
traders, and the institutional buyers who didn't need to be
told. Still, the effort went on. Federal and state regulations
went into effect; floor procedures were tightened by the exchanges
themselves to outlaw manipulation and sharp practice by insiders.
By the time the postwar horde descended, the market had been
swept clean and was ready to do business.
The people had cash. The merchandise was attractive. And the
market place was open, aboveboard, and bright with sunlight.
By this sequence, it appears, some 12,500,000 Americans have
become investors.
This could be mirrored in Forex, where it is possible to obtain
free software that can help predict future price movements with
great accuracy, reducing risks for all investors.
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