The reason for this is that the money which a stockholder invests is subject to all of the ups and downs of business. The stockholder of a corporation is a partner in every sense of the word. Moreover, as has been pointed out, corporations do not have to make provisions for repaying the money they get by the sale of shares, although they sometimes leave the way open to do so at the option of the directors. As long as a corporation continues in business, therefore, the only way for a stockholder to get his money back is to sell his shares to some other buyer. If, on the other hand, the corporation discontinues business for any reason, the stockholders are entitled to receive only their pro rata share of whatever assets are left after the claims of the creditors (including the bondholders, of course) have been satisfied. So that the primary considerations m stock investment, are, as a rule, marketability and the interest return. From what has been said, it is clear that stocks, as a class, yield more than bonds. There are but two really distinctive types of stocks; namely, preferred and common. Preferred stocks, which take precedence in respect to their claims upon assets, with relatively few exceptions, almost always represent income at a fixed rate; whereas common stocks represent speculative income which may vary from year to year as the earnings of the issuing corporations rise and fall with the inevitable changes in general trade and business conditions. This is important to bear in mind in considering the question of marketability, although in actual practise, stocks both preferred and common, listed and unlisted, fluctuate in market price for many other reasons than those connected with the earnings of the issuing corporations.

As for the different classes of stocks, it may be said that in general the railroad and public utility issues show greater stability than industrial issues, just as in the case of bonds. Mining and oil stocks are large and important classes, which it is safe to say, however, ought to be left to veteran investors. These industries, as such, are, of course, perfectly legitimate, but in spite of the fact that in numerous respects they have been developed to a point where they take on many of the characteristics of industrial or manufacturing enterprises, they depend for their success upon very many contingencies which serve to make them, at best, highly speculative. And they are still among the favorite industries to be taken up for exploitation by unscrupulous promoters.

There is a double risk in oil and mining ventures in that no one can tell when an oil well or mine will give out, and secondly in the fact that every ton of ore or gallon of oil taken out reduces the value just that much. But there are many companies which have so many actual producing wells or mines that the risk is distributed over a wide area. Moreover the real legitimate mining and oil companies build up great reserves to protect their stockholders. Any banker can name you a score of such companies, but no human being is able to follow the sad careers of all the scores of thousands of merely projected or half developed companies. They are the graveyards of investors' hopes, the countless "prospects" of mining.

Bank stocks comprise a special class of securities seldom, if ever, to be recommended to the average investor. The large and better established issues of this class, while they may pay dividends at high rates, as a rule sell at prices which reduce the net returns on the investment to exceptionally low rates. Such stocks are usually bought by business men of large resources who find special advantages in the kind of banking connections which partnership interest in such institutions brings to them.

An element of risk peculiar to this class of stocks is in the double liability imposed by law upon holders in the cases of all national banks, and in the majority of cases of state banks. This means that in case of failure or the winding up of a bank's affairs for any reason, if there are not sufficient assets to pay the claims of the creditors, the stockholders may be assessed up to the par value of their holdings to make up the deficit.

If you are thinking of investing in some stock or bond usually the first thing to do is to look it up in one of the standard reference books. Perhaps the best known books of this class are Poor's Manual, The Corporation Service and Moody's Analyses of Securities, You will usually find one or all of these books in a bank or broker's office. Go in and look it up yourself before you bother people with questions. Many times you can get all the information you need out of one of these big volumes. If you find enough information describing the character of the company's business, its earnings and its financial condition, the next step is to discover from your bank or some other agency the standing of the people in the company. Although the books I refer to probably contain the names of nearly one hundred thousand different companies, yet there are innumerable concerns so small or so local as not to appear therein. That fact does not necessarily condemn them, but it requires greater caution on your part.

As far as the larger and better known companies are concerned, you can get from almost any broker a little book known as the Investor's Pocket Manual, which gives not only the salient facts about the company, but the range of prices of its stock. The book is entirely reliable. Practically all members of the leading stock exchanges distribute this booklet free to their customers. It is not got out by brokers at all, but by a publishing company which supplies the booklet wholesale to brokers and stamps their names on the cover.