viii
security.  It  has  been  theoretically  and  practically ­
  proved  that  by  splitting  up  invested
capital  in  equal  proportions  among  a  number
of  investments  similar  in  quality,  yet  whose
price  movements  are  all  governed  by  different
influences,  a  combination  of  investments  is
obtained  in  which  a  fall  in  the  realisable  value
of  a  portion  of  them  is  simultaneously  counterbalanced ­
  by  a  rise  in  the  realisable  value  of
another  portion  of  them,  and  that  in  this  way  a
true  balance  of  values  is  established.
This  system  of  investment  poise  and
counterpoise  is  known  as  the  system  of
Geographical  Distribution  of  Capital.  Just  as
a  carefully  studied  system  of  averages  eliminates ­
  all  taint  of  gambling  from  a  sound  system
of  insurance  business,  so  a  sound  system  of
averages,  based  upon  the  Geographical
Distribution  of  Capital,  reduces  to  a  minimum
the  taint  of  speculation  from  the  act  of  investment. ­
  From  their  very  nature,  insurance  and
investment  are  both  highly  speculative  transactions, ­
  which  can  only  be  raised  to  the
dignity  of  solid  business  by  a  carefully  constructed ­
  system  of  averages.
By  means  of  this  system  of  Geographical
Distribution  of  Capital  every  investor,  who
has  quite  made  up  his  mind  what  his  real
investment  object  is,  can,  from  the  very  outset