40

For  these  reasons,  no  investment  should  be
purchased  without  due  consideration  of  the
company’s  balance-sheets  and  position.
A  close  valuation  of  a  company’s  affairs  is
much  less  complicated  than  many  imagine,  and
whenever  any  difficulty  is  experienced  in  this
respect  it  can  always  be  easily  cleared  up  by
consulting  a  competent  financial  adviser.
We  have  now  established  the  fact  that
external  causes  give  the  keynote  to  the  pricemovements
  of  almost  all  solidly  founded  and
well  established  investments,  and  that  internal
causes  only  modify  this  main  controlling
force  in  exceptional  cases.
Another  glance  at  the  charts  of  pricemovements,
  which  we  publish  earlier  in  this
chapter,  will  indicate  that  the  relative  strengths
of  external  and  internal  causes  in  the  case
of  sound  investments  may  be  respectively
expressed  by  the  ratio  of  4  to  1.  This
ratio  only  applies  to  investments  where  intrinsic ­
  safety  is  capable  of  clear  demonstration
at  the  time  of  purchase,  as  it  is,  of  course,
patent  that  new  and  untried  ventures  have
first  of  all  to  find  their  right  price  level.
During  the  period  when  a  new  concern
is  moving  erratically  in  search  of  its  proper
orbit  of  fluctuation,  it  is  obvious  that  internal
influences,  such  as  altering  capital  safety,