In other countries even those individual investors who in this country would buy securities direct are apt to efface themselves as individuals and join investment trusts or investment associations. These associations are common in Great Britain, France, and Holland, and are not uncommon in other countries. The investment associations frequently sell their own bonds as well as their own shares. They take the money thus obtained and invest it in securities of other corporations. What is the advantage, it may be asked, of this indirect method of investing?

The great advantage is that the uninformed judgment of the individual who purchases only a few stray securities from time to time, is replaced by the trained and experienced judgment of men well acquainted with investment securities and the investment market. This at least is the theory of the situation. There is another advantage, also, in the fact that, instead of having available for investment only the small savings of individuals, the investment association deals in large sums and is therefore in a position to buy advantageously. Furthermore, on account of its large purchases it can distribute its risk over a wide field. Its securities, for instance, would not all be bought in one country but in several countries; they would not all be in one or two lines of business, but in several lines, and so on. This principle of the distribution of risk is the most practical form of insuring the safety of the investment that has yet been brought forth. The investment associations, as a rule, are managed with skill and ability and in the long run make money; though there are, of course, some unfortunate exceptions.