Mohave County miner and our mineral wealth., 1922-05-12
PURCHASE
 OF MINING STOCK

VI suuSbtSS VI ~~ss
 Wellesley Hills, May 6.-When ask ed for an opinion on certain mining stocks, Roger W. Babson, advisor to over 10000 investors, today pointed out three basic principles that should be borne clarly in mind by any one contemplating the purchase of this group of stocks.
 "The industries engaged in pro- duction of raw materials" observed Mir. Babson, may be divided roughly into three groups: Mineral, vegetable and animal.
 "The first group, mineral, includes all of the various mining projects. Fundamentally it is the weakest group because the investors dividends from mining stocks come largely from his principal. A mining company is very much like barrel of apples, when you take one apple from the barrel there is one less apple in the barrel. Every dividend one gets from the stock of mining company represents the return of a portion of the princi- pal invested. This means that if you have a stock, for instance, in a cer- tain mine that, has a life of B 1-3 years, and you receive a dividend of 6 per cent on that stock, you are really receiving a dividend of only 8 per cent on your investment, the other per cent is the return of your principal.
 "You see mining stock, to compare favorably with any other kind of stock, should pay at least 8 per cent or per cent more to cover this re- turn of principal. The only proper way for the investor to keep his books is to divide the dividends he receives on mining stocks into two portions. One portion is to be credi- ted to principal, and the other to in terest.
 "There, however, is another req son why mining stocks are different from other stocks. When buying mining stock one bets on what is in the ground. Yet one never knows what there is in the ground until after he has spent his money to get it out. An admission fee must be paid before one knows what there is inside to see. As 95 per cent of the mining companies never get ore on a paying basis and 5 per cent are very profitable, this is gambling to the nth degree.
 Mining securities for these reasons represent the most speculative class of stocks, altho most people do not appreciate this fact. A Methodist who does not believe in playing cards may buy mining stocks, and it is considered perfectly alright. He would, however, get far better mental training if he played poker and in many instances his percentage of loss would be less.
 q do not mean to infer," continued MT. Babson, "that mining stocks as a class should not be purchased, only that they should not be bought on hit or miss basis. The copper in dustry, for instance, is absolutely Legitimate, as farming, building, or operating a water power, it is here to stay. When you buy an interest in the copper industry, you are getting into a legitimate business, in a legi- innate way. The distinction between buying into the industry instead of buying stock in a single company must however be kept clearly in mind.
 There are several thousand diff ferent copper mining stocks on the market today and yet IS of these companies produce 80 per cent of the copper. By buying the stocks of these IS companies, you can have an interest in 80 per cent of the in dustry. The point is this: If you put say $500 into these Is com panies, you are not betting on any one company. You are buying an in terest in the copper of America, and the value of your stock depends not on whether copper is found here or there but rather on the price of cop per as determined by the law of sup ply and demand.
 "This particular group of stocks, representing the industry, naturally fluctuates with it. With a great sur plus of copper on the market, as was the case last year, the stocks go to the low levels. That is the time to buy your interest in the industry. If you hold these stocks until the sur plus is absorbed and the price of copper goes up, these securities in- crease in price and should then be sold out. By following this basic plan you can make very handsome profit over a period of two or three years, and you assume practically no risk. As you are not planning on them as a permanent investment,