Show AUTHENTIC STATEMENT special to THE EXPRESS fsr IV 1 BABSON ANSWERS FOUR investment QUESTIONS PARK MASS As I 1 travel about their arc are four qi qt fitt lons which I 1 am most coin com itly asked let im ine atheni tills this week question no I 1 on boks in it iii i eral would this bv be I 1 cooj time foi i small investor to to 11 SL ll 11 ins ill securities even thol though iii the market may go 1 1 bit higher and wait for or the anticipated bargain harKA iii levels this question implies the tile iiii ila tural desire in III all of us to wit walt I 1 net get out ou if f the market at it tile I 1 top before a downturn occurs scarcely a day goes goe by when the market looks relatively high I 1 that most of us do not feel like selling elling all of our securities then the next day we hesitate to sell any in the hope they will go a little higher there Is a distinct danger in selling out all of 0 ones holdings and then inter later bp discouraged about that decision it the stocks stock a use ise I 1 to till aill higher levels if this happens one can create the double error of selling too soon and then buying back too high the best way I 1 believe to avoid being whipsawed is not to depend upon a policy of selling all of ones stocks at any ally particular time but rather to sell a few ew s from time to time ume as a they advance and as very substantial profits have been made in n them anyone who carries into a market slump stocks amounting to only 23 25 to 35 percent of his investment funds certainly has no real worries the investor who is dependent upon income and who la not price conscious might carry barr a larger amount of sound divided paying stock issues in to ti a market slump I 1 suggest sug geat therefore that rather than selling out all at of your stock hold ings and then sitting back and I 1 waiting for bargain levels it would be better for sou to keep ci a few stocks but at the same tune time hold a backlog of reserves bilat would be b available for the it purchase of storks stocks later on question no 2 on utility stocks do you think utilities ya would uld suffer with another de congress 9 many investors associate a democratic congress with the unscrambling of various utility li holding elding companies prior to world war 11 II which adver adversely jely affected their stocks also the democrats have led the movement toward public ownership ot various hydroelectric hydro electric development I 1 now however that the utility industry is organized and capitalized ca on a straight forward basis and arid since new hydroelectric developments may be limited in scope I 1 believe the utility stocks present perhaps the best combination of security and yield because the utilities have had to raise tremendous amounts of new capital during the last ten years year it has been necessary for the various state regulatory commissions to take a somewhat mure generous attitude in the establishment of rates in order to permit a fair return on the invested capital in view of the fact that still further expansion li ii anticipated in the industry I 1 we should expect a continuation of this favorable rate policy to continued on page 10 AUTHENTIC STATEMENT continued from page 9 make it possible for the otilit utilities es to raise money through the sale tale of stock this should ure a continuation of present dividends but docs does not give the tile hid holder r of utility stocks much opportunity port unity for or appreciation question no 3 on inflation inflate would you expect greater 11 under a democratic con gressa also greater foreign aid I 1 assume that the idea of in clation which prompts thi this i refers to a rising real rei es estate t ate and commodity price lev tl and a rising cost of living Atu actually ally the great inflation of hit last fifteen years has ai at ascii of the mn monetary try iffla tian of erld war 11 II and bo bl caus c of tho tha F subsequent lent d debt abt expansion jf I 1 all kinds kd and I 1 lie heavier borrow indis by the gen rial vial public to buy on install merits after prices have bo acme u me fully ad adjusted to the pie pe sent nt inflated monetary base ba e I 1 doubt very much that even a democratic congress aou would id arcite te sf fici cic it additional monetary beyond what would b be c needed to hold hola prices at cresea pre seit t levels in the matter of foreign aid there th e might be a somewhat greater greater tendency on the part of or a strongly democratic congress tr tc grant heavy expenditures for such purposes in order to keep employment high in the united states Ilo however wever it 13 likely that even in this matter there would not be too much difference regardless of which major party controls congress I 1 think that long term promises of aid more than two years at a time will be avoided but money aid h far cheaper than war furth emore the net cost of foreign aid old need not have much effect on federal taxes question no 4 on how to be liquid and yet get income what is your advice to a reader who has 30 to 40 percent of his resources ces in cash and desires to obtain an income from it for the next three or four years although I 1 can make certain board generalizations regarding the division of investment funds end the nature of securities lur each euch division it is I 1 believe cry fry Import important ai ii to relate the percentage distribution of funds to the particular reader and his personal requirements all of us however recognize that the market Is now pretty high even though it may go higher before a long te term downtrend t end sets in it appears obvious that readers who are not prepared to see their stocks sell much lower some day ought to hold a substantial amount of reserves now this does not mean that the money has to stay in ll 11 dierking die eking accounts it Is quite common practice in investment circles to designate as cash money that is really invested in m savings bank accounts savings st loan deposits high grade readily marketable short term bonds and even certain preferred r stocks tocks it Is desirable tj ta have yr your ir money earning something holding reserves today as op nosed to common stocks entails less sacrifice of income than at any time for many years these opinions of roger W dabson are re published in this paper every thursday |