Imperial Valley press., 1944-10-20
HEDGING AGAINST
HIGHER PAY

HEDGING AGAINST
HIGHER PAY
When the price controls and tie
F excess profits taxes are renewed,
most business men can pass on a
goCd portion of their taxes. This,
however. cannot be done by these
who have retired from active buSi-
ness except through a most careful
selection Of investments. What are
the investments by which investors
can compensate for these federal
expenditures for pensions, Social
E Security. relief, etc? l believe that
che answer li5S with putting one S
money into good merchandising
stocks.
You sec that people who are to
get veterans or old-age pensions
and. in fact. Social Security, will
not save the money; but will imme-
diateiv spend ii at the food. variety
and chain stores in the neighbour
hood. Hence. one wa for investors
10 protect themselves is to own
stocks in these stores. Instead of
fighting pensions, benefits, Hep
kinS' minimum wages or Hillman's
labor union rates, it may be safer
in the end 10 let the politicians give
this money TO the people and then
collect ii back again through the
stores at which they trade.
BUY MERCHANDISING STOCKS
But there are other reasons for
buying coed chain store stocks be-
sides those given above. Consider
the following:
l. Very few of these merchandise
ing chains have bonds outstanding
and 4 number have no preferred
stock. I like best common stocks
which are not preceded by either
bonds CT preferreds.
,. Many of the chain store stocks
are selling for not more than their
book values. If We are headed for
further New Deal interference with
business, book values are an lmpor-
tant factor to consider.
3. McSt Of the chains rent their
stores and. hence, are not tied down.
like a manufacturing company or
large department store, to one spot.
They can move when, as and if de-
siTable.
i. These chains have a fairly low
labor cost: but any wage increases
will apply also TO competitors.
Hence. the labor expense is not an
important factor.
5. A good merchandiser can liqui-
Gate quick. i necessary. Some of
these merchandising companies
might we'll he compared with good
bank or fire insurance company
as lar as their assets are concerned.
6. IF some state enacts taxes
which are too severe, a chain can
quickly move out Of that state as
leases become cancelable. 1 know OF
certain cases where they have
started 10 move and the legisla-
ture has repealed the taxes.
7. Merchandisers pass along fed
eral taxes by adding them to the
price of goods. II there is not a
profit in carrying certain merChan-
disc the stores will not carry such
merchandise In fact. ] believe that
most taxes are ultimately paid by
those manufacturers or wage work
ers who are tied down to one To-
cality. not by the storekeepers
2. Various new inventions, proc
es5es and products are coming on
the market after World War II.
This will be beneficial to many in
dustrial concerns. but will be harm
ful to many others. This is prob
lem. however. which the merchant
need not consider He is in a posi-
ton to sell whatever the public
wants whether cid or new. and by
WfOmrVcr It is manufactured
.. The merchandising stocks yield
well and most of them are listed.
The chains cover large areas and
many .tatcs Hence. they give an
imporl ant geographical diverzifica-
ton
l0 Merchandising stocks should
not be harmed by initiation. OF
course. in a bull market everything
goes up, while in bear market ev-
crvtling goes down. but after World
War II We may not necessarily have
either a bull or a bear market, but
rather 2 sclectivc market.
WHAT STOCKS TO BUY
Don't write me to make selections
for von. Here is a simple rule to fol-
low: Make a list Of the chains oper-
atinc in or near the busiest corner
RI your citv Take the list to your
banker and have him check those
whose stocks are listed on the Big
Board in New York City Then visit
and compare these stores yourself.
Buy he stock Of the tore which
you tLink to be the best operated. |
think all Will be in excellent finan-
cial condition If you believe that
two or three arc equally we'll Oper-
sted. then divide your money among
al Of these Divcr5ification never
burned anyone.