Every evening, Wilmington daily commercial., 1922-05-13

Wslle6ey Hills, Mars.. May Ia
When asked for his plan for selecting
industrial stocks. Roger w. Bsbson,
tho statistician today sounded a now
note in recommending what he calls
the repeats"
Manufacturing concerns are d.
vidcd into three main sroups.' said
Mr.. BabEon. according to the nature
OF what they produce. Thesc groups
arc 40 follows;
Group one includes those concerns
making products that are bought
eventually by every person. but In
small quantities. Cofilns arc simple
illustration OF this group. For eSrh
bought. This IL known as the essen
tial group.
Group two includes those concerns
manufacturing products thich only a
certnin percentage OF th6 people buy
at all and which only a very few buy
more than once. There are hosts OF
illustrations OF t11s group. Pianos.
automobiles, yes. even garden tools
are in this group.
Germs who are engaged In the manu-
facture OF repeat merchandise The
breakfast food people nre an illustra-
ton OF such manufacturers. You get
into the habit OF using n certain break
fast food md YOU keep buying II. The
soap people are engaged in thls repeat
business. Such business IN tho most
profitable both TO the manufactures
and TO the investor. Industrial se-
curities which are founded on the third
group are generally recognized ms the
most attractive.
"one might think that the essen
tial group II the best group in which
to invest ones money. but a study oi
| the situation convinces one thnt thii
is not 80. Although some one In sure
some day 70 buy cofin for each oi
us. yet the cofYin industry IL very
easy industry to get overstock ed
Surely the sale OF collins can be In
creased very little by advertising
salesma snip. or any other mean.
known TO the most clever sales.
managers.
Take SALT" continued Mr.. Bsbson
salt Is tho prime essential OF food
yet the clevereet advertising in me
world could not increase the natura
consumption of salt. Although of.
hand you might think Il much safeI
to loan money 20 the sa,. industr,
than TO the candy industry. yet O
study Of failure records show that the
candy industry IL eafer than the sail
| Ia
| ments are not essential, tine demand
for thcm can be increased to an al
most unlimited extent. Hence, In
dustries producing prodtscts Of the
second group are preferable 20 those
Of the f1rst group.
The third group, including those
Industries based upon repeating pur-
chases. fs tho most profftable OF all
The securitics Of tho gillette Raxor'
ara a very good illustration. Tho OIL
lctts Company can affurd TO - q
rNxor ut n ioss because OF the btsdss
they sell sster Another illustration 4.
the Eastman Kodak Company. East.
man can well Afford TO son a kodak a.
cost because OF the great source Of In.
como In films and supplies. Another
illustration - the phonograph.
piano would go in group two, a phono-
graph would also go In group two, but
phonograph records would go in grouI
three. The victor Company has made
Its greatest profits on the record,
rather than on the Photographs. Thi.
fact Is very interesting when lookinl
over the stock market. because yo,
will see that the most profitabl,
stocks are those Of companies llk,
Gillette, Kodak, and Victor, all O
which come under this third group.
Investors should not be frightene
at the word Industrials'' Ever
class OF securities has itA stron
features and ite weak features. n
class of investments has a monopol
of all the good points. The wise in
vestor will diversity, taking part gov
ernments and municipals. part raj
. roads. part industrials. part publi
utilities, part other classes. Whel
, however, seeking industrial securitis
, select those industries that are base
> upon repeat orders and where II
! market is more or less unlimited.
Some people bank on monopol
, They win buy only into industri,
= which have monopolies. Temporari
they may win, but the fact of Il
company's having a monopoly usual
tends to make the company inefficie,
;,