Changes in national income undoubtedly affect returns from individual stocks in a systematic way. This was shown in our illustration of a simple island economy in chapter 8. Also, changes in national income mirror changes in the personal income of individuals, and the systematic relationship between security returns and salary income can be expected to have a significant effect on individual behavior. For example, the laborer in a Ford plant will find that holding Ford common stock is particularly risky, because job layoffs and poor returns from Ford stock are likely to occur at the same time.
