Every evening, Wilmington daily commercial., 1921-09-24
BUY BONDS NOW,
SAYS BABSON
Famous Statistician Also Sees
Danger in "Cal.able" Issues.
(All Rights Strictly Rcserved)

BUSINESS louay is uTasRing ON DOL
tom--our index figure standing now
at as points below normal compared
with 100 points above n few months
ago. This means that we are In the
sixth period OF the Business Cycle. and
that n peri~d of lower money and
higher bond prices is at hand.
You have an opportunity here that
will not be equaled in the investment
field for several years TO come. Buy
all the long time bonds you can carry.
right now!
when interest rates are low bonds
are high priced 40 that they yield only
the current rate Of interest. Like
wise, when interest rates are high, as
at present. bonds are cheap. 80 that
they yield a high rate of interest
When interest rates are low, as they
were a few years ag, one should buy
short time bonds because IL is not
advisable TO tie ones money up for
a long time nc small return. To-day,
however, when interest rates are high.
the shrewdest investors are buying
as long term bonds as they can pos
sibly get Rockefeller, Morgan, Melltn n,
and the other rich men OF the country
are Sc eeking long term investments
and buying not only bonds that pay
a high rate of interest but bonds tnat
do not become due for twenty or thirty
years.
Recently l have been hunting such
good issues for some very careful in
vestors and have been surprised TO
find that most of the new isues have
callable" features. Many of these
issues are callablo at any time or
after Ave years, It par or small
premium. The bonds have n great
big six, seven. or eight per cent on
them and the date when due, twenty
or thirty years hence, is IN great big
type. This gives an investor 10 under
stand that he will get the high rate
of interest for twenty or thirty years
Careful examination Of bond, however
shows that in very small type is a
statement that the Company, II il de-
sires. can redeem the bond at par OF
with small premium at any time or
after a few years.
Investors should watch for these
I lNAAtAAkAN AteANi tS NtAtA lAltN AtlA k0tluE
They are simply a heads 1 win, tails
YOU lose" proposition in favor OF the
Companies. II we should get into
another war and interest rates re-
manned high, or if the Company
should have hard luck, then it would
pay the investor for twenty or thirty
years. But if interest rates should gC
down as they probably will, and the
Company is prosperous. as the investor
of course hopes it will be, then it will
simply call the bonds and leave the in.
vestor to take lower rate OF interest
for the balance of the time. Thus ia,
big six, seven or eight per cent and IN,
twenty or thirty years does not NEAR
anything.
Investors who have trouble i,
finding new high rate long term is
sues with reasonable and fair callabl
features should revert to their ol'
friends, the three, four and FIVE pc
cent bonds that were put out year
ago when money rates were low
When Companies could borrow 70
three four or five per cent they made tn
bonds just as long term as possible
and they didn't bother 10 put in an.
clauses in fine print. For instance, tn
Northern Pacific II. r. Co, three pc
cent bonds do not become due unit
the year 1000. while most of the goo
Railroad bonds were put out for period
of fifty years. AS these bonds ca
now be bought at a discount so as I
yield six, seven or eight per cent ever
they should not be forgotten. A s1.0O
! S42 bond at fifty, --hich means that
can be bought for $500 is a better in
vestment than per cent 81 900 bon
at par"