Flight From Bonds to Stocks 207

ing investment trusts, investment counsel and other
skilled means of diversifying the use of their funds.
Naturally this enlightened process has created a tremendous
 new market for securities that in times past
have gone begging. With the increased demand, the
price of these formerly despised securities has risen.
Thus the change in the caution factor, reducing it
to a much narrower margin from the true mathematical
 value of common stocks as their element of
risk have been absorbed by intelligent diversification,
has helped put the stock market on its higher plateau.
[t constitutes a permanent reason why this plateau
will not sink again to the level of former years except
for extraordinary causes.

Principle of Constant Scrutiny

This is more certain because of another principle
which may be added to that of diversification. It is
the principle of constant inspection or check-up as to
the status of companies issuing stocks, and constant
turnover accordingly. Of course, bonds require less
inspection than stocks; hence in times past when each
man was his own investor, the busy man or the lazy
man preferred bonds because he could put them in
his safe-deposit box and forget them, while investments
 in common stocks required unusual care and
attention in the turnover of his funds—more than
he was willing or able to give.
For the sound investor in common stocks must
turn them over constantly, selling those that are losing
 in value and investing in those that are gaining