Stephen M. Smith, 68 a stockbroker with the firm of Shearson, Hayden and Stone here and an area resident for 39 years, died of cancer Saturday at Georgetown University Hospital.

Mr. Smith began his career in investment securities at the age of 14 in New York City as a runner on Wall Street. He spent the next several years working in investment houses there and attending night classes at the New York Stock Exchange Institute.

In 1939, he moved to the Washington area as a broker with the local office of Fenner and Bean, which later merger with the firm of Merrill Lynch. He subsequently became a regional manager for Stanton-Lewis & Co. and was associated with several other local firms before joining Shearson, Hayden and Stone.

In 1962, Mr. Smith served as president of the Washington Security Dealers and Traders Association. He also wrote a textbook and articles on security investments and taught seminars on investment counseling.

A native of Brooklyn, N.Y., he lived in Vienna, Va. During the 1940s, Mr. Smith headed the Arlington County Community Chest and the Catholic Charities of Northern Virginia.

He was a member of the Arlington Republican Club, the Ancient Order of Hibernians and attended St. Mark's Catholic Church in Vienna.

Sorvivors include his wife, Kitty, of the hoem; two daughters, Patricia Jones, of Arlington, and Kathleen Dougherty, of Spring Valley, N.Y.; a brother, Edward; a sister, Nora Diaz, both of Brooklyn, and eitht grandchildren.