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Common Stock Trading
Common Stock Trading
Why Stocks Belong in your Portfolio
Why do you invest? Because you have plans for the future: a new home, your
own business, a college education, a financially secure retirement. And
each of these goals has a cost. But as you accumulate wealth over the years,
there's an unstoppable force working to erode the value of your assets-inflation.
Little by little, inflation eats away at your purchasing power, and each
year, your dollars buy less and less. You've seen the evidence: a postage
stamp, a gallon of gasoline, a box of cereal, a new car. Each costs far
more today than just 10 years ago-that's inflation!
If inflation rises 5% per year, an item that costs $1,000 today will cost
$1,630 in 10 years. Similarly, the cost of your dreams-your retirement home,
your grandchild's education-can be expected to rise, too. And because Americans
are living longer, they're enjoying more post-retirement years. That's why
it's so important to keep your dollars growing faster than inflation.
To stay ahead of inflation, you'll need investments that have potential
to appreciate in value, such as common stocks.
Stocks represent shares of ownership in a company. Unlike the owners of
debt securities, such as bonds, the stockholders of a company have a chance
to participate in the company's success. If companies grow and prosper,
they may pay shareholders a quarterly dividend, and their shares can become
more valuable. However, stocks have greater price volatility than fixed
income alternatives: if the company falters, the price of its stock may
reflect its woes.
While past performance cannot predict future results, historically, the
long-term rate of growth of common stocks has exceeded that of fixed-income
investments and inflation. Over the past 40 years, in fact, a leading indicator
of stock market performance, the Dow Jones Industrial Average, has increased
850%-much faster than the Consumer Price Index, which rose 450%.
Although there are many high quality choices for today's investors, if your
investment plan aims to keep you ahead of inflation, it should include an
appropriate amount of common stocks in its investment mix.
Our Independent Philosophy of Stock Investing
At B.C. Ziegler and Company, common stock investing services are based on
the qualities that have defined our firm since 1902: quality, integrity
and service.
We believe that an independent source of research is important to maintain
an objective view of today's investment opportunities. Our recommendations
are based on high quality, objective equity research, which is provided
to Ziegler by some of the nation's leading independent stock research specialists.
Why do we value independent research? Because it means that when we recommend
one stock over another, we have nothing to gain, except your confidence.
Equity securities are just one part of a total portfolio that's appropriately
diverse. Diversifying among several types of investments is a strategy we
recommend, because it helps preserve the safety of your capital. In keeping
with our belief in diversification, Ziegler follows a carefully selected
group of stocks that fall into three general categories: yield, growth and
value stocks.
Yield or income stocks have a history of paying out a portion of their annual
profits to shareholders in the form of high quarterly dividends. Growth
stocks reinvest most of their profits back into their business to expand
and strengthen it so the stock's value will grow. Value stocks are generally
bargains-they're out of favor now, but have improving prospects for future
growth in earnings, sales or dividends.
The individual stocks we recommend within those groupings are generally
conservative equity choices, which have been thoroughly studied by the Wall
Street firms that provide our independent research.
Personal service
Your Ziegler investment broker can help you determine which individual stocks
best fit your personal investment objectives. That guidance is the benefit
of consulting a financial professional. When you invest with a Ziegler investment
broker, you can expect fair, accurate execution of your stock trades, at
the best available market price. When you need assistance, our brokers are
accessible in person and on the phone, and our service is personal and friendly.
When Is The "Right" Time to Begin Investing in Stocks?
A point of concern for many stock investors is deciding when to start investing.
Since stock prices can fluctuate daily, how do you know when it's the right
time to enter the stock market, and when it's wise to get out?
Most investment professionals agree that time, rather than timing, is the
key to prudent investing. That is to say, the longer the period of time
you're in the stock market, the longer you have to reinvest earnings and
dividends to keep your portfolio of stocks growing. Building a strong equity
portfolio happens over time, not over night.
Unfortunately, there's no magic cue that tells you when to start. The right
time to begin investing in stocks is as soon as possible. Instead of timing
the market and trying to guess where it's headed, we suggest that you simply
start as early as you can.
When you invest a regular amount over a period of many years, you can ride
out the normal ups and downs of the markets.
If you're concerned about the timing of your investment, you may want to
consider making regular investments in a fixed number of shares over a period
of time, regardless of the current state of the market or the stock's price
on the day you purchase shares. Using this strategy can ease your concerns
about where a stock's price will head after you invest.
If you've never invested in stocks before, you'll be comforted to know that
in addition to providing objective research and professional advice before
your purchase, your Ziegler investment broker will be there to help you
learn more about the performance of your stocks after you invest. Our attention
to personal service sets us apart.
A Historic Comparison: Stocks, Bonds and Inflation
Everyone knows how inflation affects the prices of the goods and services
we buy. To maintain your purchasing power, you'll need investments that
can keep the value of your portfolio ahead of rising costs. Which investments
fit the bill?
The table below shows how dramatically inflation has affected the return
on five popular investments over the last 69 years. As you can see, common
stocks have grown in value more than the other popular investments.

Real rate of return
An investor who purchased only corporate bonds over the last 69 years would
have earned 5.41% per year, on average. But when we adjust that return for
the erosive effects of inflation, the result is the "real rate of return."
This measurement shows how much- or how little-we have improved the purchasing
power of our dollars through various investments.
Notice that investors in long-term Treasury bonds have earned only 1.65%
per year after adjusting for inflation. Other fixed-rate investments and
savings vehicles have also done little to help improve investors' purchasing
power.
All of these are quality investments, and each is chosen for a distinct
purpose. In fact, your investment broker will likely recommend that your
own a combination of many different types of investments.
In order to reap the rewards of stock investing, you'll have to accept that
your investment's price can fluctuate daily with market conditions. And
when you sell shares of stock, they may be worth more or less than when
you purchased them.
There are risks to stock investing, still the message of these performance
numbers is clear: If you're investing for the long term and want to enhance
your purchasing power over the lifetime of your investments, having stocks
in your portfolio is crucial.
Stock Investing With Ziegler: How to Get Started
Your Ziegler investment broker will help you begin investing in common stocks
with B.C. Ziegler and Company by first determining how common stocks fit
into your complete investment picture.
Discussing your investment objectives is an important part of this visit,
because your objectives and personal preferences will largely determine
which types of stocks are appropriate for you. Once you've determined your
objectives, your Ziegler broker will make recommendations about individual
companies that we follow. If you wish, independent research reports are
available to you on the stock or stocks you're considering.
Making a purchase
When you have selected stocks for your Ziegler account, we'll get a quote
of that day's market price. Whether you're selling or buying shares, at
the time of your trade we pursue the most competitive price on the best
markets available, and complete your trade promptly.
A confirmation of your trade noting details of the transaction is sent the
day following your trade. A convenient option for payment is to direct funds
from your Ziegler money market fund account to cover your purchase. If you're
selling stocks, your proceeds can also be deposited to your money market
fund.
When you open a street name account with Ziegler, we can safely keep your
stock certificates, which makes for quick and easy retrieval when you decide
to sell any of your holdings. The dividends and proceeds from your stock
holdings can be conveniently deposited to your money market fund account,
where your balance earns daily dividends while you arrange reinvestment.
Stocks you hold at Ziegler are protected against theft, physical loss or
damage by the Securities Investor Protection Corporation (SIPC) in the event
that B.C. Ziegler and Company would ever be unable to meet its obligations.
The maximum total of cash and securities covered by SIPC protection is $500,000
per client (with a $100,000 limit on cash). Ziegler has also purchased additional
independent insurance coverage for securities of our clients in the amount
of $5,000,000 per account. (Neither the SIPC nor Ziegler's independent coverage
protects you from losses stemming from market fluctuation.)
Building a Stock Portfolio: Take a Long-Term View
Keeping track of shares
A record of your transactions and your securities held at Ziegler appears
on your regular statement of account. If your purchase was made in your
street name or IRA account, a current valuation of your stock holdings will
also be listed on your statement.
Today's investors can follow the market price and recent performance of
stocks (and mutual funds) through the listings on the business pages of
most daily newspapers. And there are many other sources of financial news.
But with all the information available, there's no substitute for the guidance
of an investment professional. Because the market price of stock shares
fluctuates on a daily basis, it can be tempting to second guess your purchases.
If you take a long-term view to stock investing, you can resist temptation.
To keep your portfolio growing, it's important to work out a long-term strategy
for stock investing with your Ziegler broker.
What about investments made elsewhere?
If you own stocks you've purchased from other firms, you are welcome to
transfer any eligible stocks to your B.C. Ziegler and Company investment
account. That process can be as easy as completing one simple form.
Your Ziegler investment broker can also help you evaluate stocks that you
already hold. From time to time, it's advisable to see that the investments
you've purchased in the past continue to meet your current investment objectives.
A portfolio review is a service we're pleased to provide. There is no obligation,
and there is never a charge for consulting with us.
How often does my strategy need a check up?
Building a stock portfolio takes time and patience. The more actively you
invest, the more frequently you should consult your Ziegler investment broker.
He or she can work with you to make regular additions to your holdings,
and to evaluate the performance of your stocks. If the situation warrants,
our investment professionals can also make recommendations about when to
sell stocks.
We recommend that you consult with your Ziegler broker at least semiannually.
If you are a more active investor, you may want to review your strategy
quarterly or monthly.
Seeking Growth and Income Through Other Equity Investments
Today's investors have access to an incredible amount of information about
financial services. They're sophisticated-and they want a wide range of
investment choices. In response to our clients' needs, we offer two other
equity investment choices in addition to common stocks: preferred stocks
and mutual funds.
Preferred securities
Preferred securities are known for a feature of fixed-income securities:
Most pay a fixed rate
of dividend income quarterly or monthly. The owners of preferred stocks
have priority over owners of common stocks with respect to dividend payment;
however, their rights are subordinated to those of bondholders.
Most preferred stock dividends are cumulative, meaning if a firm suspends
its dividend payments, common stock dividends cannot be paid until all preferred
shareholder dividend obligations that were missed have been satisfied. This
feature helps preserve the continuity of your income stream.
Some-but not all-preferred stocks offer domestic corporations the opportunity
to benefit from the tax law which allows a deduction of 70% of the dividend
income received from taxable income. This incentive makes preferred stock
attractive to corporations.
Stock mutual funds
Mutual funds from many leading national mutual fund families are available
through Ziegler. Each mutual fund has its own specific investment objective;
fund objectives range from conservative to aggressive.
Investors have a dazzling number of choices for stock mutual fund investing:
growth and income portfolios, value funds, international funds, sector funds,
aggressive growth portfolios and utility funds, just to name a few.
With so many choices, we recommend that you consult with your Ziegler investment
broker to research the funds that interest you. Mutual funds are sold by
a document known as a prospectus, which you can receive from your broker.
Careful study and professional guidance can help you choose funds that fit
with your investment objectives.
Home
If you have any questions or comments, e-mail
us at wjr@ziegler.com
B.C. Ziegler and Company
Home office
215 North Main Street
West Bend, WI 53095