Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-19
THE BUSINESS OF GETTING
AHEAD.
How Business Man Should Invest.


A structure of diversified investment
| securities constitutes an ace in the hole
on which a business man can draw
| when his own enterprise languishes.
An investment scheme is the means
by which the business man can avoid
| putting all his eggs in one basket.
| The relative amount of money which
| any successful individual who is the
| sole proprietor of a business would
wish to put In outside investments
| will vary in accordance with trade
conditions. In times Of depression he
will no doubt wish to draw funds
from his business and put them in
well secured outside investment issues
and in time of great prosperity he
will probably desire to draw funds
from his investments for his business
needs. An individual with large hold
ings of cash and liquid securities is
far better able to survive economic
crises than one whose capital is al
! most wholly tied up in inventory,
plants and equipment of a single bust
ness enterprise.
Marketability Big Need.
To meet the special needs of bust
consist largely of securities possessing
a high degree of marketability. For
balance sheet purposes, securities are
only one step removed from cash on
hand and should be such as can be
| Immediately sold on the stock eX-
changes or used as collateral for bank
loans. AS a general rule, the banks
will lend only against securities which
are readily salable and which are reg
ularly quoted in the newspapers.
Though a portion of the investment
fund needs to be in highly marketable
securities, it is not necessary to keep
all the holdings equally liquid. For
his secondary investment needs-con-
sisting of surplus funds which his
own business is not likely to require
the business mans expert knowledge
of economic conditions enables him to
hold securities bearing a larger ele-
ment of risk than so-called high-grade
issues. For example, he can con-
s:stently acquire in times of approach
ing prosperity stocks whose dividends
depend on current earning power and
get rid of them when he sees indlca-
lions of an approaching depression.
Experience shows. however, that not
every prosperous business man Is
necessarily a shrewd reader of the
lacks the capacity for detecting APP
preaching economic storms, he should
concentrate mainly on securities
whose earning power continues even
during periods of recession.
The independent investor has bet
ter facilities for getting an insight into
changing economic conditions at pres
ent than ever before. A variety OF
statistical agencies, such as the Har-
ward Committee of Economic Re-
search and the Standard Statistics
Co, collect and interpret barometric
facts about the general trend in the
world of give and take.
Supplemented by Reports.
Such data are supplemented by IL
Eliminating monthly reports of the
Federal Reserve Board and each of
the ~ Federal Reserve Banks and
by monthly surveys distributed by
variety of member banks and trust
companies Thus, it is more feasible
readily to understand the current on
which the course of speculative Sc
curity prices hinge still remains to a
large extent unknowable. The art OF
forecasting is still in it's infancy, and
has not yet reached a stage or de-
yelopment whereby it can safely be
ment of Individual business men and
investors
With the trend of the longtime in
terest crates still moving downward,
it Is the policy of borrowers to redeem
callable high coupon rate loans and
substitute for them new loans bearing
lower interest rate. Accordingly
investors should carefully scrutinize
the callable provision of their present
holdings and prospective purchases.
In the present circumstances nom
caIlable bonds or issues which are not
callable for at least 10 years are
preferable AS a general rule, it seems
good policy to get rid of bonds and
preferred stocks which are selling
above their current call price. For
his personal investments, apart from
the needs of the bushes. the business
! man will no doubt wish to keep part