Date: Thu, 18 Dec 1997 10:52:25 GMT Server: Apache/1.1.3 BSDI/3.0 Content-type: text/html Set-Cookie: Apache=heart6350882442345869; path=/ Content-length: 15558 Last-modified: Sat, 19 Apr 1997 07:29:54 GMT 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.


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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