The Bozeman courier. (Bozeman, Mont.) 1919-1954, 1926-02-26

The bond market since the opening I
of the year has been firm in response
to a substantial demand for good in
~vpetroerts. This development took
place coincidently with a large vol
ume and variety Of new securities Of
fersd for public subscription.
A considerable proportion of the re-
cent offerings represents a continu-
alton of the trend notable in the last
two years toward the r~ecapitaliztion
OF established corporations that have
been carried on as family enterprises,
states the current issue of the Guar
anty Survey, published by the Cur
snty Trust company of New York.
Thereby, the Survey says, the own
Crs dispose Of their business to a
larger group Of persons, and the
number of different securities traded
On various exchanges greatly in
cceases.
Offerings Of this type do not make
additional demands on the capital
market, since the former owners Of
scok corporations are placed in pos
session Of funds for investment. The
movement is of Importance, however,
il that it indicates a feeling on the
Part Of many owners of closely held
concerns that this is a favorable time
to capitalize their profits and earning
power for the purpose Of investment
IN q more diversified list of securi-
ties.
Investment Principles
Practically any investment Of CAPT
tai involves risk, of course; but it Is
the decree of risk assumed that dis
tincuishos investment from specula-
ten. Hence, the wise investor, to
whom security of principal and regu-
larity OF income are cardinal objec-
tiVes, seeks to minimize risk as far
IS possible.
There IS no better e Of ac-
c2mrli5hing this than through diversi-
fication; for in broad, well-planned
dvecsification, practically all calcul-
900 risks may be eliminated by off
SITTING probable changes against each
Ct,cr.
The investor may place his funds
W. ely IN The securities Of a variety
c. well-managed corporations that
lave a record of sustained earning
power. lie should select those Of con-
Germs IN different lines of enterprise
whose business covers a large terri
tory, or such as would otherwise give
i-tactcry geographical diversity.
such diveysification will go far to
1aic,e The degree IF risk which arises
frcre possible local changes in the de-
uan5 FOR he products of industry.
Ire great railway systems of the
entry for many years have been
f3'lly well diversified transportation
enterprises, though they may still be
grouped as trunk lines, c~oalers, grang-
er5, ere, according to the classified
T.. Of their major traffic. The more
rcoaat CONSOLIDATION and interconnec-
ton Of local telephone, gas, and cleo
trio companies provides another field
for diversified investment, but some
CT their new securities as yet have
not been seasoned to the same extent
ss tie rails. The same is true OF
most OF the larger industrial and mer
~ch3ndising corporations which Ok
business n many different parts o.
the country; but a number of thOs'
companies have demonstrated thei
earning power through the goc'
and bad times from year to year.
Interesting Rate Changes
The changes Of interest rates an
prices Of goods that take place owe
a period of years, which greatly al
feet ircome in relation to living cost
are often neglected by an investor
for it is difficult to realize or est
rate gradual economic movement
The effects of such changes, howeve
ma- be nullified largely by holdir
bonds Of various maturities. If Il
dates when a lender of capital CO
demand return of the principal a
we'll diversified, a measure of prote
ton will be gained as to the total