FEW people outside of professional financiers understand the investment of money. Investment is a business which demands constant application and an analytical study of all classes of securities, together with the local, national and international conditions which affect the world's markets.

In the preparation of this volume, the first of the elementary series to be devoted to the subject of investments, the author has attempted to simplify the abstruse words and phrases which are used by brokers to classify various forms of investments and speculation. No attempt has been made to analyze investments, but rather an endeavor to impart to the novitiate the rudiments necessary to acquire, before an intelligent understanding of speculation and investment can be gained.

Ninety per cent, of the people who buy stocks, bonds and other securities depend upon the brokers through whom they deal for their information. An honest broker will give his client a conscientious opinion on a security, but he may err in judgment and frequently is blamed where the blame should be laid at the door of the investor for not having carefully studied the investment for himself, and formed his own opinion.

A Catechetical style has been followed. The questions and answers have been so arranged that any person without even the slightest knowledge of the operations of stock exchanges, brokerage business, speculation or investment, after studying this book, will have obtained fundamental knowledge which will enable him to intelligently pursue a higher course of study in investments.

AUTHOR.

What Is Investment?

Investment in the sense of buying and differing from speculation, is buying and paying outright for any security, whether it be stocks, bonds, notes, wheat, corn, or other forms of produce. An investment is the purchase of a dividend paying security; the investor purchases stocks, bonds or notes, because he will realize a good return in dividends for the amount of money invested, and not merely because he believes the stock will advance in its market value. It is impossible, however, to eliminate speculation from investment entirely, as the probable increased future market value of the security purchased is always taken into consideration by the wise investor.

What Is Speculation?

Speculation, in a stock market sense, is gambling. A speculator buys stocks on margin, with no intention of actually paying in full and having the securities pass into his possession, or he sells stocks on margin without actually owning the stocks. Sometimes the cheaper stocks are purchased outright for speculative purposes only. This is the case in curb securities, such as some of the mining stocks, etc., which are not dividend payers. They are purchased when cheap to sell as soon as the market has advanced. Having no value except what is created in the market, the purchase of such stocks is pure speculation.