Loading ...INTRODUCTION
The object of this book is simple and direct. All people need to invest their savings from time to time. They are in the way of knowing, from professional the book. experience in finance, what securities are best worthy of attention at certain periods ; and what should be avoided, and why. Most probably they have not available the skilled advice of competent persons ; and they themselves possess but a moderate and merely general knowledge of what forms a sound investment ‘ in spite of fluctuations of values, and of partial or extensive panics, or in what manner its soundness or inferiority should be discriminated.
This book is an attempt to furnish practical guidance on these questions, and is addressed to the ordinary investor, who shuns speculation, and simply wishes to place his money in securities which, so far as foresight and caution can provide, may be reasonably free from frequent anxiety in the holding, — securities, to use a homely phrase, upon which he can sleep in comfort, with the feeling that his savings are safe in their keeping.
A brief reference to the course pursued in the book will show the kind of map which it has attempted to draw for the investor’s direction and instruction. The book is divided into two parts. In Part I hints are furnished for the help of the investor before he decides upon an investment, and during the continuance of his holding. Hints are too frequently provided in such general terms as to be practically useless : an effort has here been made, founded upon experience, to express and enforce the suggestions in a concrete and workable shape. In times of great fluctuations in prices, the investor frequently loses his judgment, particularly when a general feeling of want of commercial confidence occurs. No emotion spreads and deepens more rapidly and unreasonably by contagion than fear when it is shared with a multitude. The apprehension aroused in each person is intensified by the similar feeling experienced and expressed by his neighbours, and his own apprehension reacts by expanding and confirming theirs ; feeling then suppresses thought, and panic takes the place of rational order ; losses, which a little calmness and reflection would have saved, are incurred by the reckless and reasonless sale of securities, as though the end of all stable ventures had arrived ; and foolish sales engender sales still more foolish. It is probably not far from the truth to affirm that greater losses of money have arisen from the absence of sobriety of judgment produced by meaningless panics than from injudicious investments themselves.
Part II, then, is intended, by showing the causes of these changes of value, and the periodical character of their occurrence and disappearance, to enable the investor to maintain his steadiness of mind, and thus to save his money. Nothing so fully allays terror and fearful expectations, with their unhappy consequences, both in financial affairs and in the ordinary experiences of life, as a simple and rational explanation of causes, and the remembrance of the fact, of which all history is vocal, that these causes are not exceptional and peculiar to any stated time, but appear and vanish in almost orderly succession.
Other chapters deal in a similarly practical manner with objects connected with securities and finance generally, which the investor should be acquainted with in an elementary way ; with the prudent distribution of his savings over various classes of investments, of which examples are supplied ; and with the nature of different securities, and the mode of assessing their value and fitness.
But it is obvious that no set of rules or suggestions can be mechanically provided to supersede the investor’s personal examination and thoughtfulness. If he devote attention to choosing the stuff and fit of his clothes, the same personal (and not delegated) degree of thought and interest at least should be bestowed upon the serious question of the disposition of his funds, however small. Investments are matters to be pondered over, not to be determined, as they so frequently are, on casual advice, hearsay statements, the mere fact that a friend has selected a particular security, attractive but delusive advertisements, or often on no valid reason whatever.
This book necessarily assumes that, as in other affairs of his life, the investor will use his own intelligence, especially in his selections, and its end is to help him in this direction. Not the wisest book, again, can apply specific guidance for every contingency and set of circumstances affecting securities that may occur ; its function is necessarily limited to showing the investor how to regard and estimate the events which may arise as the reason and course of any action it may be expedient to adopt.
It is so vital to enforce upon the investor the fact that no rules can supplant individual care and judgment, that throughout the book I have insisted, almost to weariness, upon the indispensableness of this personal element. In many instances, no doubt — in the case, namely, of persons untrained in the study and discipline of business — the capacity of judgment will be defective owing to the
unavoidable absence of specific financial knowledge, and I have done my best, accordingly, to act as a helpful mentor to them in their purchases, holdings, and sales.
Part II appeals to a wider audience, and provides careful information and guidance respecting the money market and finance generally, adapted to the student as well as the investor.
The book, as a whole, professes to be a more comprehensive and practical treatise, in an elementary form, than any volume upon the subject which has already appeared.
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