"ASK YOUR BROKER"

Evening Post, Volume CXII, Issue 151, 23 December 1926, Page 6

"ASK YOUR BROKER"

SAFE INVESTMENTS

RESPONSIBILITY OF BUILPEES OF PROSPECTUSES.

The New Zealand stock exchanges claim that tho investing public are turning towards them with greater and greater confidence, and the Auckland Stock Exchange quotes figures in support of tho claim. The main hold that any stock exchange can have on the public must be based on the proved integrity of its members; but from time to'timo various forms of restrictive legislation or regulation are proposed with the idea of limiting tho activity of share-vendors or other outside agencies of investment. S'cmie further control over ■ prospectuses has also been suggested. On this and .■•cognate subjects the Melbourne "Argus" writes:— "Attention is directed by a correspondent to the promotion of mining companies which havo no hope Of attaining success. They havo failed to .'live up' to prospectus estimates of tho value of the ground to be worked, and the suggestion is made that a legal managers' association should bo created through tho agency of the Stock Exchanges to afford protection yi the general investor. It is difficult to see that any great good would result from any action of tho kind. Tho remedy rests with tlie people themselves. Their first caro should be to have submitted to them before investment ii made a properly prepared prospectus. Statements in a document of the kind carry a responsibility which can be sheeted home to promoters and others concern"' od in it 3 publication.

"The next atop is to ask the advice of a reputable firm of brokers as to the standing of the promoters and the jirospects of the proposed enterprise. Such a firm will be able, from everyday experience, to pick out officers and mining men who do not lightly engage in flotations. Thus winnowing will be done for the investor. He will learn whether the promotion is highly speculative or whether the precaution has been taken, as a preliminary to the expenditure of working capital, to have the property examined by mining engineers of proved ability. Unfortunately, as the majority of people wish to get rich quickly, they listen to tittle tattle, and will not; subject the advice to buy shares to a proper test. Immediate market movements in their favour are what are expected, not the steady development in expert hands of a mining property, -with an ultimate return from the mine because of a wise expenditure of capital. It has always to be recollectedi that mining is more or less speculative.

"The wise investor, therefore, besides associating himself with those who can furnish him with good advice, must also make allowance for the operation of the two factors just stated. He also has to learny to be able to cut a loss and to take a profit—operations which are easy to state, but often difficult to decide upon at any given moment.''