Word: investors
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Dates: during 1950-1959
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Last week some 4,000 investors a day, with a similar desire to see their money grow, were plunking $10 million daily into mutual funds, which offer an almost irresistible lure: the chance to make a profit with a minimum of risk and worry. The investor entrusts his money to an organization that invests it in dozens-sometimes hundreds-of U.S. companies, spreading his risk as wide as the economy. Even more important, he also buys savvy in the stock market, letting the fund managers do his buying and selling for him. Says a St. Louis businessman who gave...
...frankly speculative funds (Townsend Growth and Keystone 8-4 funds), which warn the investor that the risks are greater, along with the rewards...
Says M.I.T.'s Robinson: "Within their range, mutual funds can fit the need of almost any investor." They can also find a host of critics. Many critics charge that the funds, along with other institutional buyers, have needled the roaring bull market to artificial highs, that their constant buying, chiefly of blue chips, has helped create the present shortage of stocks. The funds' answer: they hold only 3.4% of all stock on the New York Stock Exchange, and do not hoard it; they turn their shares over faster than the exchange as a whole...
Concerned over "the excessive use of credit for purchasing securities," the Federal Reserve Board last week ordered new regulations to curb stock market credit. The Fed kept its basic rule that investors must put up 90% cash on new stock purchases. It added new provisions, effective June 15, to cover accounts in which stocks were bought on margin before the present margin rate. Formerly, if an investor sold stock, held on a margin below 90%, he had to use only 10% of the proceeds to pay off his debt to the broker. Now he must apply 50% of the proceeds...
...rules also bring convertible debentures under margin rules for the first time. After converting the debenture into stock, the investor has 30 days to supply the 90% margin. The Fed will also keep a close watch on bank credit, which has been used to get around margin requirements. Banks often lent up to 50% on stocks. Now, if the bank lends more than 10%, both a bank officer and the borrower must sign a statement that the funds will not be used to buy listed securities...