Moderation Vs Growth - An Historical Debate Continues Today

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The market is always in the habit of overbuying stocks of favored groups or overselling shares of "deflated" industries and this is something you don't want to get caught up in.

It pays not to overreach for or chase after any stock. There is nothing permanent in the growth of any industry group. Just as yesterday's glamour stocks have become today's wallflowers, so today's favorites could be tomorrow's laggards. The glamour of uraniums, airlines, oils, etc., came and went. We have just witnessed the rise and fall, temporarily at least, of electronics, bowling and boating" No one knows how long the market's current favorites such as toys, department stores, banks, insurance companies, and savings and loan associations will be able to occupy the center of the market spotlight.

Market leaders keep changing hands, with the "Street" turning to one group after another in a pendulum fashion. Style or vogue in investment can change rapidly. Growth can go as easily as it comes. Only constant alertness to the changing fortunes in industrial groups and individual corporations will enable you to reap the benefits while avoiding the pitfalls.

One comparatively sure thing in the characteristically unsure stock market is that you can't go too wrong in putting money into companies geared to consumers' spending patterns in line with the major shifts in the nation's unusually rapidly growing population. This, combined with almost revolutionary upward movements in the real purchasing power of millions of families, is fast changing the character of our living standards.

Companies that know how to upgrade consumers' desires and spending concepts are likely to be among the first to find new ways to make money. Once in a great while, you may come across a few companies that can compare with the General Motors or Eastman Kodak of the past—if you know how to recognize them. They are the ones that will create more wealth than income.

As a corollary to its outstanding profit potential, growth stock investment entails above-average risk. Of thousands of companies aspiring to be an "IBM," there is still only one IBM. For every "Polaroid" which succeeds there must be hundreds of aspiring "Polaroids" which fail.

It is only prudent for you not to pay on high a premium for any stock, especially one which has gone up sharply recently. I would rather miss a boat than overstretch myself for it. For if you miss one boat there will always be the next one to catch. If, however, you overstretch yourself, you could get hurt.

I would rather get into situations quietly improving but not yet reflected in market re-evaluation. Sometimes there is a considerable time lag between, which creates growth opportunities for alert investors.

There is no such thing as an absolutely had stock or an absolutely good stock. What actually counts is the price. No stock is too good for any price, nor is a stock (except for the frauds) too bad for any price. At a certain price level, even a normally unattractive stock could become attractive. Or vice versa, a normally attractive stock would become unattractive if excessively priced.

Paying attention to price and being engaged in your company research should save you from overreaching. Investing is a long-term consideration, so take the time you need to choose carefully.

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