1. Select the answer that correctly completes, each sentence

1. I'm going to buy these stocks because they’ve been showing a good ____________.

a. earnings b. growth rate c. commission

2. How much was his __________ on that painting at the auction?

a. fluctuation b. bid c. bargain

3. We can hardly pay for the necessities of life these days with this ____________ inflation.

a. declining b. bullish c. double-digit

4. Before acquiring more collectibles, Phil wants to check their _______________.

a. bargain b. strategy c. liquidity

5. Even dealers in gold coins and jewelry are being badly affected by the ___________ market.

a. bearish b. recession c. slowdown

Dialogue 2

Phil O'Brien has decided to follow Carol Levine's advice. Hi has made an appointment to see Jeff Hunter, a broker, to discuss how to invest the money that was bequeathed to him by his aunt. He's in Mr. Hunter's office now.

Mr. H. Hello, Mr. O'Brien. It's good to meet you. Have a seat, please.

Mr. O'B. Thank you. As you may know I wanted some advice how to invest my aunt's money. I have almost no experience with investments and I feel I don’t have enough knowledge or information to make intelligent choices. One of your clients, a Ms. Carol Levine recommended that I see you.

Mr. H. Well, I can understand your concern. There are many investment possibilities, and conditions fluctuate so much nowadays.

Mr. O'B. The first area I thought about was stocks. My wife and I have a few shares in utility companies already, so stocks are not completely strange to me.

Mr. H. I should tell you that there are two ways to look at investing stocks. First, there are long-term investments. You can put your money into stable companies with a relatively secure yield. Or, you can concentrate on buying stocks that promise a good, rapid growth rate and resell them at a profit.

Mr. O'B. Well, I guess the second option means that I'd have to watch the stock market pretty carefully. I know I don't have time for it.

Mr. H. You're right. Your investment strategies would depend on whether you were facing a bullish or bearish market. You’d also have to consider factors in the economy such as a slowdown or a recession, double-digit inflation, interest rates, and other things that affect the companies you invest in.

Mr. O'B. I'd like to know what kind of stocks you've been recommending. Which sectors of the economy have been strong lately? What are the areas I ought to think about?

Mr. H. Well, we've had some good results with high yielding bank shares recently, and experts are predicting these will appreciate quickly in the near future. The data processing companies have been doing well and high technology stocks have also had high earnings.

Mr. O'B. I've read that the market has been pretty bearish lately. It must be a good time for bargain-hunters to invest.

Mr. H. True, but bargain hunters mustn't just buy stocks unless they make sure that the companies they invest in can make the growth through difficult times. Otherwise those investors may be faced with declining values.

Mr. O'B. What do you know about collectibles? I thought that they might offer some interesting possibilities for investment.

Mr. H. You've got to be careful with collectibles nowadays. Works of art, stamps and coins are less in demand now and are proving rather collectibles are finding their liquidity limited.

Mr. O'B. I can't believe it. It doesn't seem very long ago that dealers and auction-houses were making very big commissions. I remember some very high bids on paintings about a year ago.

Mr. H. Yes, but that has changed. Even gold jewelry, which was in great demand because of the steadily rising price of gold, has become less popular as the value of an ounce of gold has fallen over the last six months.

Mr. O'B. Well, you've given me some valuable information. Let me talk things over with my wife and I'll talk to you again next week.

Mr. H. Good. Let's see if we can make some money for you!

Comprehension Check

A. State whether each statement is true or false based on the dialogue

1. Phil O'Brien already owned some stock when he consulted Jeff Hunter.

2. Mr. O'Brien prefers the option that requires him to watch the stock market carefully.

3. His broker advises Mr. O'Brien that investment strategies depend on whether the stock market is bullish or bearish.

4. Mr. Hunter suggests that inflation and interest rates also affect the market.

5. Mr. Hunter is uncertain whether high yielding bank shares will continue to appreciate.

6. Data processing and high technology stocks have had a yield recently, according to Mr. Hunter.

7. Mr. O'Brien has read that prices have been rising in the market lately.

8. Mr. Hunter doesn't recommend investing in collectibles because they’re no longer as easy to sell as they were before.

9. Paintings, unlike stamps and coins, have nut lost any of their liquidity.

10. Her broker thinks that Mrs. O'Brien should sell her gold jewelry because of the steadily rising price of gold.

Answer the following questions orally

1. What are the two ways to look at investing in stocks?

2. What are the factors that should be considered by someone who is developing his investment strategies?

3. What kinds of stocks have been doing well lately?

4. What do bargain-hunting investors who buy stocks in a bearish market have to be careful of?

5. What are collectibles? Why aren't they good investments nowadays?

Matching. Find the words in the right hand column that match the words closest in meaning in the left-hand column.

slowdown choice sale by bids decreasing inflation rate of return on investment commission ability to be changed into cash

yield process of rising prices declining liquidity payment for broker’s services option auction decrease in economic activity

Rewrite sentences replacing the underlined word or words with the correct form of one of the new words of this lesson

1. You should look into your alternatives before you invest in these stocks.

2. Mr. Halpern is an investor who counts on prices failing in the stock market.

3. This stock promises a very good percentage of increase in value.

4. The government is not dealing very successfully with this period of temporary economic decline and unemployment.

5. We're hoping our shares in the data processing company will give us a high income.

6. Cathy Caruso is an investor who buys stocks when prices rise.

7. The broker told me my stamps and coins would be quite difficult to sell right now.

8. He's selling these works of art now because he's afraid their ability to be converted into cash will be decreasing.