In making this excursion into the speculative he will, I think, be less likely to bark his financial shins if he follows the following simple rules:—
1. Diversify (which goes without saying).
2. Prefer securities which have a fair round amount outstanding, say at least a million sterling. Some of the little fellows are very sound and comfortable, but a big concern is, on the whole, more likely to be well fathered, well held, and well looked after.
3. Prefer securities of companies and debtors that have a record and a past, so that you may have something to work on in guessing at their future. Leave new creations to those who know all about them, and to professional investors, whose business it is to nurse them through their infant ailments. I know that I can be floored by examples to the contrary. But how many of us would be richer if we had always followed this rule!
4. When you invest abroad never buy the ordinary stocks, and only very cautiously the preference stocks and bonds or debentures, of any railway or public utility company—such as tramways, lighting, electric power, etc.—unless the great majority of the shares is held by local investors. Here again there are brilliant examples to prove that I am wrong.
