New-York tribune., 1920-11-23
Demanding Per Cent Is Not Safe

question: wish to invest around $40, -
uVo 10 return per cent year. and so
far as / am able to make a diversincation,
nnd that $4,000 In st. Louis & San Fran
! siSO0 e. Ooo o11nstment 6s, 1853, at around es;
o. 1923, at around rs: forty American
Gar Gar and Foundry at around 30, and 100
return ,slsso a YEAR. Win Won ,'u" Ist % % =
know OF other bonds and stocks cheaper
than these and just as safe. and also some
OF better grade but OF equal prices to re
turn the same amount? Would you leave
out American CIR and Foundry, or SOUTH
slider Union Pacidc paying 10" 10 per p cent cent
OK New York Air Brake paying also 10
per cent or Pere Marquette spreferred.
or Chicago. Rock Island & Pacific 6 per
cent preferred, or Canadian Pacific paying
/ 10 per cent'-R. G..
Answer--You must realize that if
YOU are determined upon a yield Of s
per cent you cannot obtain high grade
investments. None of the issues you
name is entitled to good investment
rating. The st. Louis-Ssn Francisco
adjustment 6 per cent bonds pay in
terest from available net income and
foreclosure proceedings may not be
instituted in the event Of default. The
interest is cumulative, however. This
bond is sensitive to earnings, and
therefore must be considered specula-
proVemcnt per cent is a second lien
on l $50 miles in Colorado at $4,000 a
mile. We regard the bond as a very
tair one, but tho road is in trouble and
there may be a considerable amount Of
litigation, although we do not believe
the position of the bond will be dis
turbed. American Car and Foundry com
mon stock is speculative because the
STOCK is sensitive to earnings. The
company is good one, very we'll
managed and conservative, but common
stocks invariably are speculative be-
cause they are so sensitive to changes
within the company. Dividends are
seldom stable on this account. Nor
do we regard railroad common stocks
as sound investments at present 1t
remains to be seen what the carriers
Will do under the new conditions. 1t
seems to us you would do far -better
to be satisfied with a reasonable return
and feel that your principal is not in
Jeopardy. Such bonds as Bell Tele-
phone of Pennsylvania per cent, 1945.
Canadian National Railways equipment
per cent 1885, yield almost 7 per
cent, while Standard Oil of New Jer-
sey per cent preferred and United
States Steel z per cent preferred WELD
about 6.65 per cent Here you have
sound securities enjoying good markets
and none is very sensitive to earnings
Air Brakes Yield Is High
onr''1os, 3rg1es'ion,-E.ndly n, S.y let ne know your
OPINION or New York Airbrake quoted
around 90. Is this preferred stock? 1t
pays 10 per cent. DO you think it will
continue to pay this? DO you think Of any
stock paying good that would be prefer
able IS. NJ.
Answer.-There is but one issue of
New York Airbrake Company stock. 1t
is speculative, because it is highly
sensitive to earnings. The company
did we'll during the war period, but
earnings have fallen off considerably
since then. We cannpt say whethef or
rot the present dividends will be main
tanned. The yield at present prices is
nigh, too high, in fact, to be & conserva-
tive investment. If you seek large
return you should realize that your
principal may be in jeopardy Why
do YOU not consider good preferred
stocks, such as United States Steel,
american Tobacco, American Car and
Foundry and National Biscuit?