CHAPTER  IL

WHAT  INFLUENCES  THE  REALISABLE
VALUE  OF  STOCKS?
In  writing  this  chapter  we  have  assumed  that
the  reader  is  already  acquainted  with  the
various  types  of  stocks  which  are  in  existence,
and  that  he  knows  how  they  respectively  rank
for  dividends  and  how  they  compare  with  one
another  in  soundness  and  desirability.  These
points  we  have  fully  explained  in  How  to
Manage  Capital,  which  is  the  companion
volume  to  the  present  hook,  and  we  need  not
repeat  the  explanation  here.  In  the  previous
chapter  we  showed  that  in  the  selection  of  a
stock  for  investment  the  chief  characteristics
to  be  considered  are  :—
1.  —The  capital  security  which  it  affords.
2.  —Its  income-producing  power.
These  two  questions  have  at  all  times
received  attention  from  all  cautious  investors,
but  their  investigations  have  rarely  extended
beyond  these  two  points.  We  now  intend
to  explain  the  existence  of  a  third  influence,
which  is  even  more  potent  than  the  other