The Washington herald., 1914-04-25

question. however, is whether or not
such a story " uld represent the truth
as to what happened to the real investor
during the past few years.
To one who is a student of invest
ment and who understands what il really
means. that story would have little
meaning. so far as investment is con-
cerned. Let us set over against il a
record published in the middle OF April
by life insurance company that is a
real investor. Ii is not a very large
company. nor is il supposed to be an
extraordinary wise one. II is managed
presumably with about the ordinary
amount of skill and conservatism shown
by investors of this type. II it were
true in a general way that the bust
ress of investment had proved Of late
years to be an unsound and unsafe pur-
suit. its records would surely disclose
that truth.
On the first Of January this year, this
company owned between S3,OOOOOo and
81. .OOO,OOO of bonds of all classes and about
s.. 10000 of mortgages. In that SlO.OI0. Coz
odd investment there was ample OppOr-
tunity for trouble if there has really been
a period in which the true investor has
met much trouble.
On the first of January the total amount
OF bonds owned by that company. which
had ceased TO pay their interest. was
$500 face value. which had market
value OF about $500. There was here a
loss Of about 500. or less than six one
hundredths OF per cent. So far as the
income was concerned. there was loss
of $50 out Of about SljO,Oo0.
In mortgages a total of S2OsH of income
was not paid out Of approximately 60 0nO
and most Of this interest. according TO the
present statement. was interest that fell
dufa in DDrRmhar thar Would ha
with a little delay.
II is obvious enough. 50 far as the
showing OF this company is concerned.
that nothing very serious happened in the
investment world at any time in receiN
years. II is perfectly apparent from this
record and from dozens OF others just
like it. that could he adduced. that so far
as the integrity OF principal and the safe
ty OF incomes was concerned. most if not
all. of the disturbances that have taken
place have occurred in securities of
type that the very conservative investor
does not. as a rule. buy in large quaint
ties. II is probably safe to say that not
more than l or > per cent of the con-
sentative investment funds Of this cOun-
try have been hit 20 any serious extent
by the conditions that have Gre ted such
an enormous amount OF comment in the
markets for securities.
or course. a few epiS6SSS of the contrary
sort have stood out very prominently.
The decline Of the stock of two New Eng
land railroads from very high prices To
very low prices. and the total wiping out
Of the dividends Of those two railroads
have OccasiOned an enormous amount of
loss. discomfort and suffering TO a large
number of people. 1t 80 happened that
these two stocks had for many years
been the kind of an investment in which
many New England families were inclined
to put large part of their money. In a
great many cases the total Investments
held by people were one or both OF these
not all. Of their funds placed in these two
have been fearfully hurt and
to them il is small comfort To learn that
the general run OF investment funds in
the United States has been almost. if
not quite. immune from similar disaster.
The lesson of il all is plain enough.
The company that has been used above as
an illustration not only uses well-trained
judgment in making its investments in
bonds and mortgages. but il also keeps its
wonderfully diversified. In all.
its list comprises over S.G0.NO Of bonds.
There are only eight items Of $4,000 or
more. and there are only two items of
800 COO or more. The biggest bond item i'm
the list is an underlying bond Of about the
strongest railroad in the country. quoted
at a very high premium.
That is diversity and diversity. when all
is said and done. iS at least the step
mother of safety in investments.