Newspaper Archive of
The Sundance Times
Sundance, Wyoming
April 4, 1946     The Sundance Times
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April 4, 1946

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/ In the Black Hills of Wyoming The Sundanee Times, 8undanee, Wyoming - sstatemen I Babson' INVESTMENT TRUSTS New York City, March 29. In view of the tremendous growth in the business of Investment Com- Panies, readers ef this column should realize their possibilities, both as a service to the small in- Vestor and as a factor in stabiliz- ing the present stock market. "CLOSED-END" VERSUS "OPEN-END" COMPANIES Investment Companies are div- ided into two main groups: The closed-end companies are the old- fashioned Investment Trusts, of ~hich there are a large number mcattered throughout the United States. There, however, are only a few large ones, the securities of ~hich are listed on the New York Gt0ck Exchange. As examples of these companies, I might mention ~hman Corporation, Adams Ex- press, Atlas Corporation and Tri- ~ontinental. These closed-e~Id companies have a definite amount of capital Stock which is not increased or decreased. When an investor buys SUch stock 'he {lees not buy of the COmpany but, through a stock- exchange broker, must buy the Stock of someone else who desires to sell. As a rule these companies do not diversify very broadly but USUally confine themselves to SPecial situations in which they l~Urchase a large interest. Often Stocks of these companies sell for less than the real liquidating value ,~fhthe secnrities which they hold. is is an advantage to the in- vestor when buying such stocks; rhut a disadvantage when selling. "OPEN END" COMPANIES When a salesman calls upon You to sell you the shares of an t.~veatment Company it will .pro'b- ~JY be an open-end company ~'here the amount of stock out- Standing varies from day to day. There are about 75 of such active itlPen-end companies. For instance, the salesman should sell today 00,000 worth of these shares, When the checks come into the cOlnpany it will go into the stock 4.taarket and invest this $I00,000 ~7 perhaps twenty high-grade ~Sted stocks which stocks will be held in th' eom anv's treasul ' , "S " . ~hen, thee c0rap~ny will isstYe ~00 000 worth of new shares Which will be nmiled out to the above-mentioned investors. t~It Will be seen, therefore, that ~'aese open-end Investment Com- ^~-les provide a very good method "~ diversification for small in- vestors. Naturally, the investor must pay something for this ser- vice. All "open-end" Investme~lt Companies add a sales charge to the asset value of their shares and this charge normally runs around 8~ percent. There is, however, no charge for liquida- tion of a holding except in very rare instances and in such cases it is usually less than 1 percent. Without getti,ng into the minute details of the computation, the base figure of asset value is ar- rived at by dividing the net value o~ the assets at market by the number of outstanding shares and adding to this the sales charge. This net asset value figure is what is used to determine the price paid at liquidation. DIFFERENT CLASSES OF OPEN-END SHARES Among the larger of those open- end companies might be mentioned the Massachusetts Investors Trust; Keystone Custodia~q Funds; In- corporated Investors and the State Street Investment Corpora- tion. These companies often have different Funds. One Fund may be limited to common stocks another Fund to Preferred stocks; and another Fund to .bc,nds. More- over, in some cases the above div- isions may be divided into "high- grade with low return" and "spec- ulative with high return" which i might mean six or more different: Funds. This enables an investor to decide for himself the charac- ter of securities in which he de- sires to invest, .but still insures him broad diversificatio~ in the group which he selects. Further- more, there is no reason why an investor cannot select more than one group, if he so desires, and thus get a dout)le form of diver-: sification. INVESTMENT COMPANIES AND THE GENERAL S'POCK MARKET Investors buying the shares of any investment Company should realize that there is nothing guara.nteed, either as to the an- nual income to be received, or what cash will be returned if one desires to sell. The market price of the shares in Investment Com- panies must go up and down with the general stock market. It is not like putting your money in the savings bank or in gover~u- ment bonds where you know exact- ly what interest you are going to get and that you can get back the same principal that you put in, no more and no less. There- Mechanical Work On All Makes Of Cars, Trucks & Tractors Wreck too Large For Us To Repair Arc Welding Gas Welding Wrecker Service Day Phone 405--Night Phone ~78J or 169W Huffman Bros. Garage Located In Belleview ~elle ]B'OeLrche, S.D. fore, when buying the share of an i.nvestment Company the general stock market averages should be considered. In the early days, these invest- ment companies were not a mar- ket factor; but today they should contribute as a stabilizer of the entire stock market. For instance, it-is estimated that about 1500 firms throughout the country, with an average of 5 salesmen each, are selling, every day, the shares of Investment Companies. They are turni.ng in to the New York Stock Exchange, in pur- chases, nearly $50,000,000 per month, which is nearly 5 percent of the total transaction. It is pos- sible that one-half of the stocks now being liquidated by insur- ance companies, educational in- stitutions, a~d trust funds are now being absorbed by theseI thousands of small investors: throughout the country who are' daily purchasing the shares of these Investment Companies. These companies are a cushion which the stock market has 'never had i in the past and, until the holders of these shares liquidate, which previous history shows that as a rule they do not do, these In- vestment Companies are perform- ing an economic stabilizing ser- vice to the holders of all stocks. FAIRLY FIRM STOCK MARKET EXPECTED Today the stock market is very little influenced by typical old time speculators. The fact that he must pay 100 percent cm~h for his purcl~ases has pretty much eliminated him from the market. Wall Street and most brokers are now largely "sold out" and the market is in the hands of real investors throughout the coun- try who--either directly or through these Investment Com- panies-have the securities paid for and in safe deposit boxes. They are holding these for income; only some panicky event could cause them to sell. Days when the market is strong there usually is consldera,ble profit taking. So long as the In- vestment Companies and other legitimate investors can absorb these sales, the market sells off. When the buying power of these I.nvestment Companie,~--sp urred on by 7500 active salesmen---ex- ceeds the selling, the market con- tinues to rise. It is true that we have a "thi,n market" today; but this need not prevent it sell- ing at these levels or above for many months to come. x-- Personal Items Willis Butolph and wife and three sons and Mrs. A. A. Butolph CONOCO I Thursday, April 4, 1946 were callers in Sundance Thurs- day. Mrs. Kenneth Starr was visit- ing friends a~d relatives in Sun- dance Monday. The Starrs are now at the B. F. Lincoln ranch. Arthur R. Wilcox, Moorcroft, was a business caller in Sun- dance Monday. Mr. and Mrs. C. D. Roberts and family were visitors in Rapid City, S. D. Saturday. Among those enjoying the first day of the fishing seaso~n on Sand Creek Monday were John Binney, Sidney Harvey, Mr. and Mrs, Le- roy Schloredt, Mr. and Mrs. Edgar Partlow, Mrs. Ralph Partlow, Mi'. and Mrs. Bo'b Sherrard, Wade Bagget. Guy Bell of Spearfish, wa~ a Sund.ance visitor Monday. The Finest Foods Expertly Prepared [ When In Spearfish Drop In for Lunch [ Or A Full Course Dinner AIRPORT CAFE ~pearflsh, South Dakota X-PERT Re-upholstery Send us your old sofa or easy chair and we will make it look like new. Your choice of fabrics and designs. Wamsley Furniture and Upholstery 25 N 5th St. Spearfish Phone 111 S @ O "OIL-PLATED engine they'd better have!" The "haulaways" are abroad in the land! Your new car is on order--or in your mind. And now here is why any car of yours should have an OIL-PLATED engine... OIL-PLATING will shield your engine's insides. It saves fine-finished surfaces from lots of wear. And that's how to raise resistance against carbon, gum, and sludge. An OZL-PLATZD engine is yours for the asking. Simply insist on filling with Con~co Nt~ motor oil. Conoco Nt~ brings its added OIL-PLATING substance. This acts mag- net-like.., joins lubricant durably to metal, so as to form protective OIL*PLATING| The procea~ is the same in any engine. Though yours may not be new, this is an extra good time to Om-PLATZ it. For it needs a Spring oil change and simply by getting Conoco Ntb you'll get oil that OIL-PLATES--at a few cents' extra cost| See Your Conoco Mileage Merchant--today. Continental Oil Company Sutton's Garage Hulett Harvey's Service Sta. Sundanco Carlile ServiCecarllle Station[ ............. Goff's Service Station Wonderview Park Grenier's Service I Sundance Service Devils Tower ] 8undaneo