THERE is no such thing as a sure remedy against losing money through investments. That is a sad fact which savers of money might as well accustom themselves to at the beginning of their careers. And the reason no investment is perfect is because human beings and all their works are full not only of imperfections but of change, chance, risk and hazard. Who can tell what the future will bring forth? It takes no flight of imagination to picture a time when railroad tracks will be worthless because all freight will go in large air-ships. Perhaps not in fifty years, perhaps not in a hundred, but the time may come.

I am not dealing in fancy, but in sober fact. Only ten or fifteen years ago bonds of ferry companies operating between New York and Brooklyn were considered good investments. They are worthless to-day because bridges and tunnels have destroyed their value.

Entirely aside from dishonest, bad faith and mere quackery all business enterprises are subject to countless hazards. Such influences as poor management, natural depreciation of physical property, new inventions, unexpected and destructive legislation, disappearance or change in demand for specific articles, violent changes in the general level of prices or in specific prices, excessive advances in wages, war, fire and physical calamities - all these tend to destroy investments. It has been said, perhaps it is an exaggeration, that no business is good for more than a generation. One thing we may be sure of, present possessions can not be exchanged for future incomes without risk. If you buy a bond it is a contract to pay money in the future and no human being can predict the future or be sure of living up to a future contract.

There are two great facts which face any one who really studies this subject of investment - one is the risk inherent in all outlays of money and the other apparently contradictory fact is that thousands of people actually do make good, successful investments. But is there really any contradiction here any more than throughout life in general? For instance, we know there is a great deal of unhappiness in the world and yet many, many people are happy.

Now, I assume that the first desire of every investor who is likely to read this book is to avoid loss, both of his principal, that is, the money he invests and of the interest, which is the return he expects to receive upon it. But only a few extremists desire what might be called absolute safety, that is, safety over a long stretch of generations, safety forever.

There have been people who owned stocks which had paid several hundred per cent. in dividends over a reasonably short period of time and then the stocks declined in value and the owners cried out in dismay. They were very foolish, selfish, near-sighted people. For example, if some of the early purchasers of Standard Oil or Calumet & Hecla stock, both of which have paid out untold fortunes in dividends, should complain if those stocks happened to suffer, the world would laugh at them.

All we can reasonably ask is that investments should keep intact for a generation or perhaps two generations and pay moderate returns. Certainly no man has a right to expect more than to provide for his old age and give his children a start in the world. He has no right to place a burden of interest charges upon the back of unborn generations. An investor lends money for a definite purpose and expects to get his money back and moderate interest for a reasonable length of time until the principal is repaid. He has no right to expect the loan to go on earning interest forever, because the purpose for which any loan is made seldom outlasts a generation and to keep its charge alive forever is unfair to posterity.

With this modified and common-sense idea of what safety means, let us see just how to go about investing money so as to prevent loss. This chapter is going to be practical in the extreme. It is drawn from extensive experience rather than from theory. If my rules appear to be negative, if the word don't appears on every page, let the reader remember that this particular chapter is concerned with only one idea, how to avoid loss. How to invest after one has learned how not to invest is far simpler than starting wrong and then realizing one's mistake after the barn door has been flung wide open and the horse has gone.

This book is written for the young man and woman of limited means rather than for the professional capitalist, the banker and the captain of industry. Now even the young person of limited income can perhaps afford to take some risk, if he has a business of his own, but he can not afford, and it is positively wicked for him to take risks in enterprises which he knows little about. Remember that the poor man loses all if his first venture goes wrong, while the capitalist, the banker, the captain of industry lose only part.

The capitalist makes a business of investing money. He loans money as a grocer sells sugar. It is a commodity to him. He has it for sale. He is prepared for large or small losses, because his profits come from the average return upon his investments, not from any one of them. He is protected by the law of averages. Risks are a part of the scheme of business, but they should be shouldered only by those who can afford them. They should be borne by men who know how to play the big game of speculation.