Idaho County free press. [volume] (Grangeville, Idaho Territory) 1886-current, 1922-12-14
BABSON SAYS
Buy Repeat" Stocks

Wellesley Hills, Mass, Dec. H.
When asked for his plan for selecting
industrial stocks, Roger w. BabsOn,
the statistician sounded a new note
in recommending what he calls "the
repeats" :.
Manufacturing concerns are di-
vided into three groups" said Mr..
Babson, according TO the nature of
what they produce. These groups are
as follows:
"Group one includes those concerns
making products that are bought even
tually by every person, but in small
quantities. Collins are a simple illus
tration of this group. For each of us
one coffin will some day be, bought.
This is known as the essential group.
"Group two includes those con-
Germs manufacturing products which
only a certain percentage of tho peo-
pie buy at all and which only very
few buy more than once. There are
hosts of illustrations Of this group.
Pianos, automobiles, yes, even gar
den tools are in this group.
REPEAT PRODUCTS
"Group three includes those con-
Germs who are engaged in the manu-
facture of repeat merchandise. The
breakfast food people are an illustra-
ton of such manufacturers. You
get into the habit of using certain
breakfast food and you keep buying
it. The soap people are engaged in
this repeat business. Such business
is the most profitable both TO the
manufacturer and to the investor.
Industrial securities which are
founded on the third group are gen.
orally recognized as the most attrac-
tive.
cone might think that the essen
tial group is the best group in which
to invest ones money, but a study
of the situation convinces one that
this is not so. Although some one
is sure some day to buy a coffin for
each one of us, yet the coffin indus
try is a very easy industry to get
overstocked. Surely the sale of eef-
fins can be increased very little by
advertising, craftsmanship, or any
other means known to the most clever
sales managers.
''Take salt" continued Mr.. Bah
son, "salt is the prime essential of
food, yet the cleverest advertising in
the world could not increase the ma.
tural consumption of salt Although
off hand you might think it much
safer to lend money to the salt in
dustry than to the candy industry, yet
a study of failure records show that
the candy industry is safer than the
salt industry. Although musical in
struments are not essential, the de-
mand for them can be increased to
an almost unlimited extent. Hence,
industries producing products of the
second group are preferable to those
of the first group.
CASE OF RAZOR BLADES
"The third group, including those
industries based upon repeating pur-
chases, is the most profitable of all.
The securities of the Gillette razor
are very good illustration. The
Gillette company can afford to sell a
razor at a loss because of the blades
they sell later.
Another illustration is the East
man Kodak company. Eastman can
well afford to sell kodak at cost be-
cause of the great source o. income in
films and supplies. Another illustra-
would go in group two, a photograph
Wouiu dlso 20 LII BeOup Two, Dub pnO-
nograph records would go in group
three. The Victor company has made
lbs greatest profits on the records
rather than on the monographs. This
fact is very interesting when look
ing over the stock market, because
you will see that the most profitable
stocks are those of companies like
Gillette, Kodak and Victor, all of
which come under this third group.