FACTS FOR INVESTORS.

Auckland Star, Volume LXIX, Issue 155, 4 July 1938, Page 6

FACTS FOR INVESTORS.

SEARCHING THE MARKETS. ELEMENT OF RISK. SHARKS IX NKYV IioMPW'IF.S. Some of the main principles to be olx-crvcd by the layman in seeking a shale investment are dealt with in the "Wild Cat Monthly," which sajs: - Kvery class of investment suits somebody. Therefore, the tilst lln:i_' the investor, great or small, needs to do is to classify himself. Docs he want the most safety it is possible to get? Or how much risk is he prepared to lake in return for the possibility of getting a higher interest rate? In most cases, if he hasn't much money and pounds are very precious, he will go not. only for safety hut for something without any further liability and readily saleable. And he can be assured that nothing is readily saleable unless it, is listed on a Stock exchange, or iinhss there is a genuine iimlei taking to buv bark a security, as in the case of I'nit Trust certificates. The exception* are negligible. so far as the general body of small investors are concerned. The pel son who is trying to sell you £1 shares, and wants only 5/ down, will tell you that the other 15/ is put in so that it may be paid out of profits and you can then get dividends on it. In SHK) cases out of 1000 he is a poor devil who is lying hard to m.ike aci ust. Once vim put vonr name on ihe dotted line you are liable for tlv.it 15 : and you can't get out of the liahiktv bv forfeiting the shares. Nothing that the po .r d-vil aforesaid lias told you or promised you matters.

If you can allY-rd to lose your money you can afford to apply for shares in a new venture. But rarely otherwise. Of course there at,, now tompauies that succeed and go on succeeding. For every success, however. there are countless failures. And quite naturally. Success in business depends on a dozen thincH; and all of them are randy possessed by a new company.

Lven when an old business is taken over by a new company there is risk in it. Very often the old proprietors go out because they fee! themselviw slipping; and in many cases they form a new company because that is the only way in which they can turn obsolete plant and stock into money.

Shan's in row- compaiTTes occasionally turn up trumps. Rut those are the prizes: those arc the things that compensate (more or loss) for the countless failures. With rave exceptions, then, shares in new companies are a gamble. If you are looking tor a gamble rather than an investment, they may be worth lm.vinjr. Jsut if you arc looking, for a safe investment, involving no risks or the minimum of risks, you will (ro rather to the old-established concern for which there is a proved need, whosemanagement lias been tested, and which is pant the often long anil tedious business of establishing a goodwill.