Arizona republican., 1920-12-05
Financial Review
By ERIC Ko55E Of 6lyth, Witter & Go.
How to Judae seeurities

The first step in safeguarding your self in the selection of securities is to be able to analyze them. This requires education in financial matters, espe- cially in the fundamental principles which should underlie every conserva- tive investment. One of the functions of good investment bankers is to fur nish investors with the necessary liter ature for their elementary education and, lacking the desire on the part of the investor for this information, to build up and maintain such a repu- tation for integrity and fair dealing that the investor has complete confi- dence in any recommendation that the investment banker makes to him. Do not depend on the tips of friends or on any tips regardless of their source If they concern the stock market. No one can make you rich quickly.
 To be a successful investment banker one must be most conservative in his recommendations. Do not believe every prospectus and circular that comes to hand, but select those which are put out by companies which will stand the closest investigation as to their methods and business ethics. Be sure that the company making the recommendation has furnished you | NAl@t OOAliPlGLC anu U uSL"OA lllS AhAOl nation.
 For any enterprise to be worthy of consideration it must be well beyond 1 the promotion stage. Unless you your self are an expert in the line of en- deavor the company is to follow and are, therefore, in position to judge
 of its chances of success, you should not invest. In case you are an expert
 in that particular line of business, you
 should make yourself familiar with the intimate details of the company's or ganization. If you do not understand this organization, have 1t investigated by sources which you know are relia- ble. Do this before you invest, not afterward.
 Do not judge a bond solely from
 the standpoint of the class of bonds 1t may represent, or from the income
 which you may obtain from 1t. Just
 because a bond Is a railroad bond, fo1
 instance, it does not necessarily near
 1t is a good bond; or because it is g
 bond possibly of an unknown company
 does not mean that it is a poor bond
 Tn the same way, low yield does not
 necessarily indicate a safe bond, nol
 does high yield necessarily indicate ar
 unsafe bond. However, 1t is very
 good law to follow that the higher the
 yield the more carefully you should
 investigate. Judging investments car : not be reduced to mathematical sci.
 ence, so ratings, although very valu.
 able and instructive. can not be con.
 sidered as final judgment. Very few individuals. regardless of their training
 or education, are fully competent tt handle money alone, and the advice and judgment of good investment bank. CTS can usually be used to good advan-
 tage. Be sure that this advice, If de
 sired, is asked for before the invest ment is made and not afterward. } The first and foremost consideration . in making all investments is the safety l of your principal. Your rate of return
 is of secondary importance to the as surance that your principal is ampl, secured and that you will be sure 0 } the return of dollar for dollar. This fl 5 the first principle of all investing, am
 when any proposition is put up to yol } do not have your eyes blinded by tn 3 prospects of high and quick returns
 but look first at the security that offered for your principal and investi gate your rate of return only afte : you are satisfied that your capital l 7 amply and fully safeguarded.