Investment, an exact science

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Monograph

Identifikator:: 865521182

URN:: urn:nbn:de:zbw-retromon-48767

Document type:: Monograph

Author:: Lowenfeld, Henry

Title:: Investment, an exact science

Place of publication:: London

Publisher:: The Financial Review of Reviews

Year of publication:: 1906

Scope:: 1 Online-Ressource (X, 160 Seiten)

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter I - On investment risks

Collection:: Economics Books

7 /¿y s ' usc/ VY To begin with, the danger is obvious of an investor confining his purchases to one stock. In such a case he would be retaking his accumulated wealth on the fortunes of a single security, and on any serious depreciation over taking the stock of his choice his loss would be considerable. Further, he would be reduced to the vexatious position of having no other practical course open to him than to wearily nurse his crippled investment in the vague hope of its ultimate recovery. A 'prudent investor will therefore split his capital up among a variety of investments. The number of investments which would best suit his case depends entirely upon the amount of capital of which he is possessed. Thus, with a capital of £1,000 to invest, three stocks might suffice, whilst with £5,000 capital, ten stocks would be requisite. Later on in this book we shall lay down a very definite scheme for the scientific sub-division of capitals of all sizes. The idea of investing capital in a variety of stocks is to prevent any financial disaster adversely influencing more than a small portion of the total capital. Therefore, to select two -or more stocks whose price fluctuations depend on the same influences would be to defeat the whole scheme of distributing capital. So that not only must capital be sub-divided among a

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