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The Financial Department is prepared to furnish information regarding standard investment securities, but cannot undertake to advise the purchase of any specific security. It will give to inquirers facts of record or information resulting from expert investigation, and a nominal charge of one dollar per inquiry will be made for this special service. All letters of inquiry should be addressed to THE OUTLOOK FINANCIAL DEPARTMENT, 381 Fourth Avenue, New York

THE FINANCIAL MAIL BAG

LL kinds of letters come to the financial editor of a maga zine which conducts a department designed to be of ser

vice to its readers. Some of them are amusing; some are tragic; many encouraging in that they show the writers to be proceeding carefully and intelligently with the selection of their investments; others are disheartening evidence that the promoters of wildcat companies can still find a ready market for their bogus wares. Too many of the letters show that people continue to buy first and investigate afterwards, when

in many cases it is too late. Many letters disclose the fact that the yield of an investment is considered as of more importance than its safety. The letters cover the whole range of human characteristics, of strength and weakness, and in almost every one of them is a lesson. It occurs to us that a few examples may be of interest.

First of all, there is the classic letter from the woman who took us to task for intimating that Liberty Bonds are a good investment. "Don't talk to me about Liberty Bonds," she wrote.

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"My brother was in the service, and out of his pay bought three Liberty Bonds. We kept them in a safe-deposit box at the bank, and one day I took them out to cut the coupons. I had them on a table, and when I had finished cutting the coupons I went away and left the bonds lying there. I remembered them a half-hour later, but when I went to look for them they were gone. And yet you call Liberty Bonds a safe investment.” It is pretty hard to do anything for such a person. Her line of reasoning would lead one to believe that if you left a twenty-dollar gold piece on a chair in the lobby of a hotel and some one made off with itas he undoubtedly would—that would prove that money is no good. Securities must be taken care of. Which is of course elementary.

One of our readers, a milliner, sent us a contract form addressed to an enterprising gentleman in Baltimore authorizing him to buy and sell securities with the money she was to furnish him for that purpose. Nothing was said about what securities. The management of the account was to be entirely in his hands, and in consideration for his "managing" it he was to receive onethird of the profits. Our correspondent was anxious to send him $800, and in order to withdraw it thirty days' notice was required from her and she was not to participate in any of the "profits" from the date of the notice. Far better to give the money to some worthy charity. It seems incredible that people are willing, even eager, to intrust their money in this way to perfect strangers, and with the chances one hundred to one against their ever seeing it again. Of course it is very nice to have people supply you with money to gamble with, you to take one-third of the profits and none of the losses, but it is not a very profitable arrangement for the owners of the money. Reputable investment houses do not do business on such a basis.

On the other hand, we recently had a letter from a young man, who is a mechanic in the Navy, sending us a list of his investments and asking if we had any changes to suggest. We had none. His six investments totaled $7,500, and every one of them seemed to us high grade and conservative. We did suggest investments for the $2,000 additional he had in the savings bank, and we tried to suggest those which were as high grade and conservative as the ones he already owned. That man will get on in life. He has saved his money and invested it in securities of the right kind. He further appreciates the fact that it is the high-grade investment which in the long run is the most profitable.

A reader from Massachusetts wrote that he had seen a statement in his local paper recently “to the effect that good stocks may be purchased at ten, fifteen, or twenty dollars a share," and asked us the names of a few of themi. Many people still have the idea that a stock at ten dollars a share is cheaper than one selling for one hundred dol

"“They tell me ..." V OU WILL always find people

I ready to retail opinions on things they know nothing aboutincluding investments. In the investment of your money, you should be guided by men of technical knowledge and experience. The security back of every bond we offer has had the careful scrutiny of our officers. If such care in the choice of securities interests you, we suggest a study of our monthly Purchase Sheet. Sent on request for Z-173.

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dividends from twenty shares of railway stock. This road had cut its dividend rate within the past twelve months, there seemed a possibility of further reduction, and the owner of the twenty shares, being dependent upon his income, was naturally considerably worried. We suggested that he exchange his twenty shares of railway stock for six shares of stock in a leading industrial corporation which he could do with a small additional investmentthereby increasing his dividends from $40 a year to $54 and, in our opinion, strengthening his investment position materially,

People write to us for suggestions as to the investing of various sums they have on hand for this purpose. When they state that they are interested only in high-grade investments, there is no difficulty in making suggestions. But when they state that they want highgrade bonds yielding from 7 to 8 per cent they are asking for two things that at the present time are pretty nearly impossible to get. High-grade bonds do not yield as much as they did a year or two ago. Money rates are lower than they were, and the man who wants his principal "absolutely safe" and still expects a return of 8 per cent is contradicting himself in terms. It is a pretty general rule that the safety of an investment decreases in proportion with the increase in yield. In other words, safety being considered the most important quality of an investment, one must pay for it, and naturally the more an investment costs the less it yields. All stocks or bonds yielding unusually high returns should be regarded with suspicion.

Letters arrive with inquiries as to the standing and trustworthiness of concerns offering bonds and stocks for sale. It is the policy of The Outlook to accept advertising only from those concerns which it considers trustworthy and reliable. As to other investment houses, it is a good rule to deal only with those which are members of the New York Stock Exchange or which have over a period of years earned a reputation for conservatism, solvency, and fair dealing. It is particularly important that an investor be absolutely sure of a banking house from which he contemplates pur

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FINANCIAL DEPARTMENT

(Continued) investments, however, is like the purchase of most other things, in that you usually get just about what you pay for. And a share of stock selling at ten may mean one of a variety of things. If the par value is $100 and it sells at $10, it would not appear to be worth much; if, on the other hand, its par is $1 and it sells at $10, that is an extremely high price and the equivalent of a hundred dollar stock selling at one thousand. People seem to think a stock is a bargain if it sells for a few dollars a share, and because of this psychological fact the promoters of speculative enterprises usually fix a low par value for the stock they offer to the public. But remember that it is not the dollars per share that makes a stock a bargain or not; the things to consider are the obligations ahead of the stock, the earnings avail

able for dividends, the amount of stock authorized and outstanding, and the per cent of par at which the stock is selling.

Among the most difficult letters to answer are those which inquire whether the writer should keep or dispose of a certain security he owns. In almost every case this question is asked because the security in question has declined materially in 'price, dividends have been reduced or seem in danger of being cut, or perhaps they have been discontinued altogether. Usually the sale of an investment like this means that the owner must accept less money for it than it cost him originally, and in most instances it is exceedingly difficult to say with any degree of definiteness whether it will ever regain its former value. Sometimes, however, it is possible to suggest a switch which will be of benefit. Recently we did this for a man who was receiving $40 a year in

Bohn Refrigerator

Company 8% Cumulative Sinking Fund Preferred Stock-Par Value $100

Net earnings for 10 years after all taxes over 3 times and present rate over 5 times dividend requirement. Net quick assets over $147 Tangible Assets over $313 per share.

Price to Yield over 8% Write for complete description.

A. D. CONVERSE & Co.

5 Nassau St., New York

WELCOME

-because in every quarter of the globe they have won the confidence of hotels, shops, transportation lines and other places where travelers spend money.

plan.

Sometimes a man sends us a list of his investment holdings and says, in effect: “These securities have declined on an average of twenty points since I bought them. Do you think they have touched bottom, and would you advise me to buy more in order to average up?" No one in the world can say whether a stock has “touched bottom" or not. If the financial editor of The Outlook possessed such knowledge, he would not be the financial editor very long, for he would not have to work for a living. When it comes to advising any one about "averaging," that is too dangerous a business. We are delighted to give what assistance we can to all those who write to us, but we cannot undertake to give advice regarding speculations. What we can do is to investigate the record of a company and as a result of our investigation form an opinion regarding the desirability of its securities. We can report this opinion to those who seek it, but we can't give “tips” or speculative advice. We value our reputation-and our life—too highly to be guilty of any such indiscretion.

A minister wrote us the other day that he was offered for $61 a bond nor

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mally worth $476. Now if one will bear in mind that a German mark is worth at par 23.8 cents and that 23.8 cents multiplied by 200 makes $476, he will realize that what our friend was offered is a 200-mark German bond. With marks now quoted at 0.55 cents apiece, two hundred of them are worth just $1.10, so we leave it to any one to de cide whether a bond which at the present time has a par value in United States currency of one dollar ten cents is a good investment at $61.

We must say, however, that on the

whole The Outlook has reason to feel justly proud of the character of its readers as exemplified in the letters they write to the Financial Department. As a rule, they are interested only in high-class investments, the kind of investments which furnish capital for enterprises which are real contributions to the industrial life of a nation. And unless capital is available for investments of this sort no nation can progress and prosper. The man who buys a good security benefits, not only himself, but his country and the world at large.

Babson's Reports

ARE YOU AN INVESTOR?

During the past year the Financial Editor of The Outlook has helped hundreds of Outlook readers to solve intelligently their particular investment problems. Perhaps you are contemplating a shifting of your present holdings or have fresh funds to invest. In either case we shall be glad to give you specific information on any securities in which you may be interested. A nominal charge of one dollar per inquiry will be made for this special service. . THE OUTLOOK FINANCIAL DEPARTMENT

THE OUTLOOK COMPANY, 381 Fourth Ave., N. Y.

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dividends from twenty shares of railway
stock. This road had cut its dividend
rate within the past twelve months,
there seemed a possibility of further re-
duction, and the owner of the twenty
shares, being dependent upon his in-
come, was naturally considerably wor-
ried. We suggested that he exchange
his twenty shares of railway stock for
six shares of stock in a leading indus-
trial corporation—which he could do
with a small additional investment-
thereby increasing his dividends from
$40 a year to $54 and, in our opinion,
strengthening his investment position
materially,

People write to us for suggestions as to the investing of various sums they have on hand for this purpose. When they state that they are interested only

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difficulty in making suggestions. But when they state that they want highgrade bonds yielding from 7 to 8 per cent they are asking for two things that at the present time are pretty nearly impossible to get. High-grade bonds do not yield as much as they did a year br two ago. Money rates are lower than they were, and the man who wants his principal "absolutely safe" and still expects a return of 8 per cent is contradicting himself in terms. It is a pretty general rule that the safety of an investment decreases in proportion with the increase in yield. In other words, safety being considered the most important quality of an investment, one must pay for it, and naturally the more an investment costs the less it yields. All stocks or bonds yielding unusually high returns should be regarded with suspicion.

Letters arrive with inquiries as to the standing and trustworthiness of concerns offering bonds and stocks for sale. It is the policy of The Outlook to accept advertising only from those concerns which it considers trustworthy and reliable. As to other investment houses, it is a good rule to deal only with those which are members of the New York Stock Exchange or which have over a period of years earned a reputation for conservatism, solvency, and fair dealing. It is particularly important that an investor be absolutely sure of a banking house from which he contemplates pur

FINANCIAL DEPARTMENT

able for dividends, the amount of stock (Continued)

authorized and outstanding, and the per investments, however, is like the pur cent of par at which the stock is selling. chase of most other things, in that you Among the most difficult letters to usually get just about what you pay for. answer are those which inquire whether And a share of stock selling at ten may the writer should keep or dispose of a mean one of a variety of things. If the certain security he owns. In almost par value is $100 and it sells at $10, it every case this question is asked bewould not appear to be worth much; if, cause the security in question has deon the other hand, its par is $1 and it clined materially in 'price, dividends sells at $10, that is an extremely high have been reduced or seem in danger of price and the equivalent of a hundred being cut, or perhaps they have been dollar stock selling at one thousand. discontinued altogether. Usually the People seem to think a stock is a bar sale of an investment like this means gain if it sells for a few dollars a share, that the owner must accept less money and because of this psychological fact for it than it cost him originally, and in the promoters of speculative enterprises most instances it is exceedingly difficult usually fix a low par value for the stock to say with any degree of definiteness they offer to the public. But remember whether it will ever regain its former that it is not the dollars per share that value. Sometimes, however, it is posmakes a stock a bargain or not; thesible to suggest a switch which will be things to consider are the obligations of benefit. Recently we did this for a ahead of the stock, the earnings avail- man who was receiving $40 a year in

Bohn Refrigerator

Company
8% Cumulative Sinking Fund
Preferred Stock-Par Value $100

Net earnings for 10 years after all
taxes over 3 times and present
rate over 5 times dividend re-
quirement.
Net quick assets over $147 Tan-
gible Assets over $313 per share.

Price to Yield over 8%
Write for complete description.

A. D. CONVERSE & Co.

5 Nassau St., New York

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