8

number  of  stocks,  but  care  must  also  be  taken
to  select  for  the  purpose  stocks  which  are
susceptible  to  as  widely  divergent  influences
as  possible.
So  far  we  are  afraid  that  we  must  appear
to  be  rather  gloomy  counsellors  with  a  tendency
to  harp  upon  disaster.  But  if  an  investor  will
only  first  safeguard  himself  against  serious
loss,  the  rest  of  his  investment  career  presents
no  very  great  difficulties.  There  is,  for
instance,  a  bright  side  to  the  distribution  of
capital,  because  an  investor  would  require  to
be  exceptionally  unfortunate  if  among  the
variety  of  securities  which  he  held  he  did  not
possess  some  stocks  which  improved  in  capital
value  or  in  income-producing  power,  or  in
both.  In  fact,  the  whole  system  of  splitting
up  capital,  in  the  manner  in  which  we  advocate
in  this  book,  is  based  upon  the  selection  of
stocks  in  such  a  way  that  the  resultant  influence
affecting  them  as  a  whole  must  tend  to
be  a  beneficial  one.  In  other  words,  not
only  will  the  losses  be  counterbalanced  by
profits,  but  the  profits  will  so  outweigh
the  losses  that  the  investor  will  steadily
increase  the  realisable  value  of  his  Capital  as
time  goes  on  ;  and  with  the  increase  of  Capital
Account  we  have  already  shown  that  an
improved  Income  follows  as  a  matter  of  course.