The Washington times., 1935-06-25

have to speculate. To put it in
another way, you must begin
realizing that the investors
problem today is to keep his
principal safe. He can not hope
for much income with safety,
but must try for some appre-
citation in his principal If he is
to hold his own.
Therefore, there is no safe and
easy way.
This condition is due to two
great causes: Cd monetary, or
price uncertainty, (2) profits, Or
net earnings uncertainty. The
problem, therefore, is to minimize
the risks of currency depreciation.
and Of Government attacks on
earnings.
The monetary risks are: silver
generalization, gold "devaluation,"
"eaSy money" policies, and the
use of Government credit as cur
rency.
The net-earnings risks are:
taxes, Government regulation and
control, Government competition
with and destruction of enterprise,
and organized labor demands.
The monetary risks are infla.
tionary. The net-earnings risks
are deflationary. Some kind of
initiation, however, is practically
certain, and, as the only kind
that can work under this conflict
of forces is fear initiation" such
initiation is the probable outcome.
Qf the Government is driven
out of its radicalism. optimistic
"credit initiation" would come.
Under existing political conditions,
however, this is very improbable).
There is no possibility of none
tary "stabilization." Both political
and economic conditions make it
practically impossible during the
next two years.
All this suggests that one should
first seek to benefit by the none
tary moves to be expected. One
should then consider the draw
backs on net earnings.
/. Gold and silver are the chief
levers the money manipulatorS at
Washington must use to depreci.
ate the dollar. Therefore, gold
and silver securities are the most
direct way to seek such protection
as is available. CThere is more
risk in silver.
Indirectly, dollar depreciation
(rising prices) stimulates some
businesses. The securities Of
companies, or any properties,
which would benefit by initiation,
are, therefore, desirable.
2. But care must be used to
avoid securities or properties
which are subject to heavy draw.
backs as to taxes, labor troubles,
regulation, competition, etc. big"
business, public utility business
and business heavily affected by
organized labor-these are to be
avoided.
Avoid high.grade bonds - they
are too high for the long pull.
Avoid high,priced blue chip"
stocks-they are too high for
your purpose and subject to "big'
ness" penalties.
Avoid speculative commodities
the game is too dangerous for
other than specialists.
MY suggestion for $4,000 Is 40
follows:
1. About $4,000 in q savings
account, for the present.
2. About $2,5OO in very care.
fully selected gold and silver
mine stocks, not selling under
So q share.
3. About $2,5OO in good Ordi.
nary industrial common stocks,
which are earning and paying
dividends that yield something
like As per cent. MANY now
pay $1-$2 and sell between Is
and 4O.) 1 would prefer
chemicals, electricals, building
materials, machinery, alloy
steels, basic food materials
tank car services, etc.
1 would diversity largely,
putting small amounts in diff
4CACAO SOVShSs
4. About $4,000 in depressed
(nOt "high grade") preferred
stocks and bonds, If you are
able to select such issues skill
fully. (OtherwiSe, divide be-
tween 2 and 81
AS alternatives, If I had a good
business, I would go far in an eff
fort to put $4,000 into reducing
my costs and building up my mar.
ket, for the future, instead of fob
lowing 90 and (D above.
Or if I had skill in real estate
would put $4,000 (instead of az
as above) into productive proper
ties, if available at bargain prices.
This requires skill and care,
I don't think effective initiation
is likely before fall. Political un.
certainties at present are enor.
nous. Hence Cd some cash re.
serve, 90 much diversification.
and (3) No praat hl1rrxy ,@rob@aI~I.S