Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-05-13
REPEAT" STOCKS OFFER SAFEST
INVESTMENT, R. w. BABSON SAYS
in REVIEWING SECURITY GROUPS

Wellesley Hills, Mass, May T.
When asked for his plan for selecting
industrial stocks, Roger W. Babson
the statistician, sounded a new note ii
recommending what he calls the re
peats."
Manufacturing concerns are divided
into three main groups" said MIR. BAD
son, according to the nature Of wha'
they produce. These groups are as fol
lows:
Group one includes tohse concerns
making products that are bought even
tually by every person, but in small
quantities. Coffins 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 concerns
manufacturing products which only a
Group one includes those concerns
at all and which only a very few buy
more than once. There are hosts OF
illustrations Of this group. Pianos,
automobiles, yes. even garden tools,
are in this group.
GROUP three includes those con-
Germs who are engaged in the manu-
f~acture of repeat merchandise. The
breakfast food people are an illustra-
ton of such manufacturers. You get
into the habit of using a certain break
fast food and you keep buying it. The
soap people are engaged in this re-
peat business. Such business is the
most profitable both to the manufac-
turer and to the investor. Industrial
securities which arc founded on the
third group are generally recognized as
the most attractive.
Zone might think that the essential
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 someone is sure
some day to buy a coffin for each of
us. yet the coffin industry is a very
easy industry to get overstocked.
Surely the sale of collins can be in
creased very little by advertising.
craftsmanship. or any other means
known to the most clever sales man.
ayers.
'sTake salt" continued Mr.. Babson.
salt is the prime essential Of food,
vet the ]cleverest advertising in the
world could not increase the natural
consumption of salt. Although offhand
you might think it much safer to loan
money to the salt industry than to the
candy industry, yet a study of failure
records show that the candy industry is
than the salt industry. Although
musical instruments are not essential.
the demand for them . be increased
to an almost unlimited extent. Hence,
industries producing products of the
second group are preferable to those
OF the first group.
The third groud. including those in
dustries based upon repeating pur-
is the most profitable of all.
The securities of the Gillette Razor"
are a very good illustration. The Gill
lette company can afford to sell a
razor at a loss because of the blades
sell later. =
Another illustration is the Eastman
company. Eastman can we'll af-
ford to sell q kodak at cost because
Of the great source of income in films
md supplies. Another illustration is
The monograph. A piano would 90 in
group two, a photograph would also
20 in group two. but photograph records
would go in group three. The Victor
company has made its greatest pro-
on the records rather than on
monographs. This fact is very interest
ng when looking over the stock market,
you will see that the most
profitable stocks are those of COM
like Gillette, Kodak, and Victor, |
all of which come under this third
Investors should not be frightened
It the word "1udustrials," Every class
If securities has its strong features
md its weak features. No class of in
'estments has a monopoly of all the
food points. The wise investor will
diversity. taking part governments and
n~unlcipals. part railroads, part indus
rails, part public utilities, part other
When, however. seeking in
securities. select those indus
ries that are based upon repeat orders
md where the market is more or less
unlimited.
Some people bank on monopoly.
They will buy only into industries
which have monopolies. Temporarily
hey may win, but the fact of the COM
'any's having a monopoly usually tends
Q make the company inefficient and
'ften ultimately brings disaster. The
who depends on monopoly is
'iayine d dangerous game. 1t is far
'etter to buy into an industry which
as a great ~undeveloped field and
which relies on repeat orders.
1 certainly advise investors against
their money into companies
which manufacture products which do
eople harm. Statistics show that the
reatest losses to investors in indus
rails have come through companies
UGH as brewery companies, for in
They have been operated purely
or profit without regard to the vel.
are OF the people. The primary feature
0 be sought when considering an in
estment," concluded Mr.. Babson, "is
be certain that your money is to
people healthier, happier, and
lore prosperous. When you invest your
honey, if you will try to select such
ompanies, and at the same time com.
anies profiting on repeat business,
will make the greatest profits
18th the least risk"