,  1

77

with  Debentures,  Preference  and  Government ­
  stocks  of  more  recently  developed
countries.  The  individual  stocks  selected  will
be  of  a  lower  grade,  and  therefore  individually
less  safe  from  a  capital  point  of  view.  This
loss  in  individual  safety  must  be  counterbalanced ­
  by  additional  sub-division  of  the  main
divisions  of  geographical  distribution.  In  this
way  the  smaller  inherent  safety  of  such
stocks  will  be  compensated  for  by  the  more
perfect  distribution  of  external  risks.  Lists
properly  constructed  on  this  principle  afford
quite  satisfactory  capital  safety.
¡V.  High  Income  the  main  object.
An  investor  to  whom  a  still  higher  yield
than  that  described  in  Example  III.  is  of
paramount  importance  can  obtain  this  result
by  investing  in  Ordinary  or  Deferred  shares
and  low-grade  Debentures  or  Preference
shares.  An  example  of  this  class  of  investment
scheme  is  shown  facing  page  87.  There  are  a
number  of  experienced  investors  who  consider
a  list  of  this  nature  quite  as  safe  as  lists  made
in  accordance  with  Examples  II.  and  III.  ;
but  great  discrimination  is  necessary,  both  in
the  selection  of  the  geographical  divisions  and
of  the  individual  stocks,  in  order  to  make
a  high  yielding  list  of  this  description  safe.