Investing can be challenging and risky, but there are some industries that are generally considered "safe" -- if the word safe can be used to describe investing at all.
Among the industries of solid reputations, you would have to put the utilities first. This has not always been so. Manipulation with public-utility holding companies was one of the skyrocketing scandals of the days before the Crash. In the 30 years since then, however, utilities have regained status among the solid rocks of the securities markets. They are rarely spectacular performers.
Rate regulation by state power commissions permits and even maintains a reasonable return on utility operations, but curbs all chance of runaway profits. All estimates of future power needs and consumption point upward. Many utilities are in the forefront of atomic-energy development. Conservative management, steady expansion of plant and generating capacity, and temperate market action maintaining yields at 4 to 5 percent are factors which currently give the better utilities a blue chip rating.
Food production and packaging is another sound and basic industry. Processors of grainthe flour millers, cereal producers, and syrup manufacturersdairymen, and frozen-food packagers are all steady performers and likely to remain so, as the population increases and the nation's diet continues to improve. Strangely, despite America's passion for beef and pork and lamb, the meat packers do not enjoy the same level of prosperity.
The drug manufacturers generally are a conservative group with an impeccable reputation and an enviable profit record. (You will see them classified as producers of "ethical" or "proprietary" drugs. The former are the medicines or medical ingredients that can be dispensed only by a doctor's prescription. The latter are the drugstore items cough syrups, cold tablets, vitamins, ointments, and pills that health-conscious America doses itself with to the tune of more than three billion dollars a year.) Competition among the drug companies is fairly fierce. The company that comes up with a new antibiotic or tranquilizer enjoys a keen competitive edge. And so does the one whose trade name for a standardized product becomes more popular than the rest. As suppliers of a basic American necessity, however, the drug group ranks with the food and power producers.
Chemicals must also be near the top of any quality list. Certainly, few industrial groups have such a high percentage of truly outstanding companies or such a basic and vital economic function to perform. Interestingly enough, as this is written, they are just beginning to come back into favor. Several years ago they were among the bluest of Blues. Then overexpansion, overproduction, and similar corporate imbalances began to plague them, and took the bloom off the rose. Earnings fell off. The performance of chemical stocks as a group lagged behind that of other industries. Now they are picking up again, and brokers' letters are rediscovering opportunities in chemicals. Such short-term reactions are not serious enough to weaken the fundamental stability of the chemical group. But one of the points to be made about the reputation of any category of stocks is that it is never invincible.
The best thing to do today is to look around and see where other conservative investors have invested their "safe" stock. Is it in technology? Oil? Then, once you have a handle on the market, you can take your money and put it somewhere where it's unlikely to be lost.