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Investing Is A Business...
Treat It That Way!

Investments are most intelligent when they are most businesslike.
It is amazing to see how many capable businessmen try to operate
with complete disregard of all the sound principles through which
they have gained success in their own business.
Yet every corporate security may best be viewed, in the first instance,
as an ownership interest in, or a claim against, a specific business enterprise.
And if a person sets out to make profits from security purchases and sales,
he is embarking on a business venture of his own,
which must be run in accordance with accepted business principles
if it is to have a chance of success!

The first and most obvious of these principles is:
"Know what you are doing—know your business."
For the investor this means:
Do not try to make "business profits" out of securities-that is,
returns in excess of normal interest and dividend income-unless you know
as much about security values as you would need to know about the value
of merchandise that you proposed to manufacture or deal in.

A second business principle:
"Do not let anyone else run your business, unless
(1) you can supervise his performance
with adequate care and comprehension or
(2) you have unusually strong reasons for placing
implicit confidence in his integrity and ability."
For the investor this rule should determine the conditions under which
he will permit someone else to decide what is done with his money.

A third business principle:
"Do not enter upon an operation-that is,
manufacturing or trading in an item-unless a reliable calculation shows
that it has a fair chance to yield a reasonable profit.
In particular, keep away from ventures in which
you have little to gain and much to lose."
For the enterprising investor this means that his operations for profit
should be based not on an optimism but on arithmetic.
For every investor it means that when he limits his return
to a small figure—as formerly, at least, in a conventional bond
or preferred stock-he must demand convincing evidence
that he is not risking a substantial part of his principal.

A fourth business rule is more positive:
"Have the courage of your knowledge and experience.
If you have formed a conclusion from the facts and if you know your judgment
is sound, act on it-even though others may hesitate or differ."
(You are neither right nor wrong because the crowd disagrees with you.
You are right because your data and reasoning are right!)

Similarly, in the world of securities,
courage becomes the supreme virtue after adequate knowledge
and a tested judgment are at hand.

Fortunately for the typical investor, to achieve satisfactory
investment results is easier than most people realize!

To achieve superior results is harder than it looks!

(Text in part by Harper & Row, Publishers, Inc.)

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